The first scene opens at the home of Sir Robert Chiltern, an up-and-coming British member of parliament, and his wife Gertrude. They are hosting a dinner party for various friends and social acquaintances which include Mabel Chiltern (Sir Robert's younger sister) and Lord Arthur Goring, son of the Earl of Caversham who is also in attendance. Everything is going swimmingly until an unexpected- and uninvited- guest shows up. It is Mrs. Cheveley, a somewhat notorious widow recently returned from continental Europe. As it turns out, both Gertrude and Lord Goring were at different times acquainted with Mrs. Cheveley: Gertrude because she attended school with her, and Lord Goring because he was at one time engaged to her. Neither are particularly happy to see her again.
Mrs. Cheveley, on the other hand, is delighted to be there, because she is for some reason extremely eager to be introduced to Sir Robert. The reason becomes clear when she tries to talk Sir Robert into supporting a fraudulent canal scheme in Argentina in which she has invested, in the House of Commons. Of course Sir Robert refuses and Mrs. Cheveley says that there was a time when he wasn't quite so honorable. Years earlier, when Sir Robert was a poor secretary working for a member of the Cabinet, Baron Arnheim- Mrs. C's former (now dead) lover- convinced Robert to sell privileged information about the Suez Canal project to him. The Baron invested in the canal and made a fortune, and the money Sir Robert received allowed him to embark on his stellar political career. Mrs. Cheveley tells Robert that she has the letter in which he gave Arnheim the info and, if he doesn't speak favourably about her scheme in the House, she will release it to the press, destroying his good name and career. Faced with losing everything he cares about, Sir Robert agrees to give support for the project in the House of Commons.
Having returned to the rest of the party, Mrs. Cheveley can't help gloating to Gertrude, whom she despises, that Sir Robert is going to support the Argentine Canal. Gertrude is shocked, because Robert had previously spoken to her of the proposed canal and condemned it as a criminal fraud. With the party still going on though, she can't question her husband about it.
After the dinner party breaks up, Gertrude confronts Sir Robert about the canal scheme. She doesn't know anything about his past indiscretion and can't understand his about-face on the topic. He lamely tries to tell her that he has received new information that may exonerate the plan, and when she doesn't buy that, says that it's a case of compromise which is sometimes necessary in politics. Gertrude doesn't believe in compromise with regard to moral matters and has always believed that Sir Robert shared her disdain for it. She can only suppose that Mrs. Cheveley has some hold over him, and asks if there's anything in his past that she doesn't know about. She has always considered him to be an ideal man, and can't accept that he might be morally flawed. She says that if he is guilty of wrongdoing, it would be best for them to live separately. Terrified of losing her love, Robert denies any wrongdoing and relieved, Gertrude insists that he write to Mrs. Cheveley and revoke his support. He obediently does so, then after Gertrude has gone to bed, Sir Robert sits alone with his face buried in his hands, knowing that he has just sent a letter which will end his career- and quite probably his marriage.