As beggars drift through the ruins of a lavish grand estate, a monk appears and begins narrating a story.
He explains that he needs to tell an extraordinary story: a stone, left behind from the construction of Heaven, was nurtured by a crimson pearl flower with its dew for 3,000 years.
Scene 1: The Grand Hall Flower becomes Dai Yu, a sickly young woman whose mother has just died.
Stone becomes the Jia's sole male heir: Bao Yu, Lady Wang's son, a spoiled young man born with a piece of jade in his mouth.
Envoys from the Emperor announce that Bao Yu's older sister has been promoted from concubine to the rank of Princess.
Aunt Xue is seeking entry into high society, while her sister Lady Wang is looking for money to repay the imperial debt.
She tells her mother Lady Wang that she feels the palace is filled with her enemies and she won't be able to hold on to her position.
Lady Wang is delighted, Granny is upset, and Dai Yu is thrown into despair.
Granny Jia falls ill and declares she wants her grandson to marry Dai Yu.
Scene 3: A hall in the estate Lady Wang, the new head of the clan, orders her son to carry out the Emperor's wishes and marry Bao Chai.
Suddenly, imperial soldiers storm into the Grand Hall and confiscate all the properties of the Jia and Xue clans.