During a raging storm, Siegmund seeks shelter at the house of the warrior Hunding. Hunding is not present, and Siegmund is greeted by Sieglinde, Hunding's unhappy wife. Siegmund tells her that he is fleeing from enemies. After taking a drink of mead, he moves to leave, claiming to be cursed by misfortune. But Sieglinde bids him stay, saying he can bring no misfortune to the "house where ill luck lives".
Returning, Hunding reluctantly offers Siegmund the hospitality demanded by custom. Sieglinde, increasingly fascinated by the visitor, urges him to tell his tale. Siegmund describes returning home with his father one day to find his mother dead and his twin sister abducted. He then wandered with his father until parting from him as well. One day he found a girl being forced into marriage and fought with the girl's relatives. His weapons were broken and the bride was killed, and he was forced to flee to Hunding's home. Initially Siegmund does not reveal his name, choosing to call himself Wehwalt, 'filled with woe'.
When Siegmund finishes, Hunding reveals that he is one of Siegmund's pursuers. He grants Siegmund a night's stay, but they are to do battle in the morning. Hunding leaves the room with Sieglinde, ignoring his wife's distress. Siegmund laments his misfortune, recalling his father's promise that he would find a sword when he most needed it.
Sieglinde returns, having drugged Hunding's drink to send him into a deep sleep. She reveals that she was forced into a marriage with Hunding. During their wedding feast, an old man appeared and plunged a sword into the trunk of the ash tree in the center of the room, which neither Hunding nor any of his companions could remove. She expresses her longing for the hero who could draw the sword and save her. Siegmund expresses his love for her, which she reciprocates, and as she strives to understand her recognition of him, she realises it is in the echo of her own voice, and reflection of her image, that she already knows him. When he speaks the name of his father, Wälse, she declares that he is Siegmund, and that the Wanderer left the sword for him.
Siegmund now easily draws the sword forth, and she tells him she is Sieglinde, his twin sister. He names the blade "Nothung" (or
needful, for this is the weapon that he needs for his forthcoming fight with Hunding). As the act closes he calls her "bride and sister", and draws her to him with passionate
Wotan is standing on a rocky mountainside with Brünnhilde, his Valkyrie daughter. He instructs Brünnhilde to protect Siegmund in his coming fight with Hunding. Fricka, Wotan's wife and the guardian of wedlock, arrives demanding the punishment of Siegmund and Sieglinde, who have committed adultery and incest. She knows that Wotan, disguised as the mortal man Wälse, fathered Siegmund and Sieglinde. Wotan protests that he requires a free hero (i.e., one not ruled by him) to aid his plans, but Fricka retorts that Siegmund is not a free hero but Wotan's creature and unwitting pawn. Backed into a corner, Wotan promises Fricka that Siegmund will die.
Fricka exits, leaving Brünnhilde with a despairing Wotan. Wotan explains his problems: troubled by the warning delivered by Erda (at the end of
Das Rheingold), he had seduced the earth-goddess to learn more of the prophesied doom; Brünnhilde was born to him by Erda. He raised Brünnhilde and eight other daughters as the Valkyries, warrior maidens who gather the souls of fallen heroes to form an army against Alberich. Valhalla's army will fail if Alberich should ever wield the ring, which is in Fafner's possession. Using the Tarnhelm the giant has transformed himself into a dragon, lurking in a forest with the Nibelung treasure. Wotan cannot wrest the ring from Fafner, who is bound to him by contract; he needs a free hero to defeat Fafner in his stead. But as Fricka pointed out, he can create only thralls (i.e. servants) to himself. Bitterly, Wotan orders Brünnhilde to obey Fricka and ensure the death of his beloved child Siegmund.
Having fled Hunding's hall, Siegmund and Sieglinde enter the mountain pass, where Sieglinde faints in guilt and exhaustion. Brünnhilde approaches Siegmund and tells him of his impending death. Siegmund refuses to follow Brünnhilde to Valhalla when she tells him Sieglinde cannot accompany him there. He draws his sword and threatens to kill both Sieglinde and himself. Impressed by his passion, Brünnhilde relents and agrees to grant victory to Siegmund instead of Hunding.
Hunding arrives and attacks Siegmund. Blessed by Brünnhilde, Siegmund begins to overpower Hunding, but Wotan appears and shatters Nothung (Siegmund's sword) with his spear. While Siegmund is thus disarmed and helpless, Hunding stabs him to death. Wotan looks down on Siegmund's body, grieving, and Brünnhilde gathers up the fragments of Nothung and flees on horseback with Sieglinde. Wotan strikes Hunding dead with a contemptuous gesture, and angrily sets out in pursuit of his disobedient daughter.
The other Valkyries assemble on the summit of a mountain, each with a dead hero in her saddlebag. They are astonished when Brünnhilde arrives with Sieglinde, a living woman. She begs them to help, but they dare not defy Wotan. Brünnhilde decides to delay Wotan as Sieglinde flees. She also reveals that Sieglinde is pregnant by Siegmund, and names the unborn son Siegfried.
Wotan arrives in wrath and passes judgement on Brünnhilde: she is to be stripped of her Valkyrie status and become a mortal woman, to be held in a magic sleep on the mountain, prey to any man who happens by. Dismayed, the other Valkyries flee. Brünnhilde begs mercy of Wotan for herself, his favorite child. She recounts the courage of Siegmund and her decision to protect him, knowing that was Wotan's true desire. With the words 'Der diese Liebe mir ins Herz gehaucht'
(He who breathed this love into me), introducing the key of E major, she identifies her actions as Wotan's true will. Wotan consents to her last request: to encircle the mountaintop with magic flame, which will deter all but the bravest of heroes (who, as shown through the leitmotif, they both know will be the yet unborn Siegfried). Wotan lays Brünnhilde down on a rock and, in a long embrace, kisses her eyes closed into an enchanted sleep. He summons Loge (the Norse demigod of fire) to ignite the circle of flame that will protect her, then slowly departs in sorrow, after pronouncing: "Whosoever fears the point of my spear shall not pass through the fire." The curtain falls as the Magic Fire Music again resolves into E major.