I.i: The old, wealthy Alphonso complains to his two friends Curio and Seberto that his daughter Alinda will not accept his match for her, Roderigo, and swears to force her to do so, although he is known to be an outlaw.
After some talk with her saucy maid Juletta, Alinda prepares for her usual charity of giving money to the poor.
II.i: Alphonso is enraged because Alinda is missing, alternately threatening Juletta and promising her gifts if she will tell him where his daughter is, while sending his other servants to search.
Roderigo calls for a halter and orders his outlaws to hang Pedro, but they refuse to have "religious blood" on their heads.
Brought in, the disguised Alinda convinces Roderigo that he can get a fuller revenge later by letting Pedro live now, fighting him at some future time.
A cantankerous Alphonso, who has lost his horse searching for his daughter, enters, and Roderigo promises to give him food and refreshment.
III.iii: Seberto and Curio, wandering the woods, encounter the still-disguised Alinda, who claims to have been beaten by Roderigo's crew and escaped; they give the "boy" money.
III.iv-v: Jacques and other outlaws are maintaining the camp in their leader's absence, but scatter at the sound of Juletta's drum, thinking the king's army is advancing on them.
Alphonso emerges from his rest disoriented and afraid, but Seberto and Curio appear and tell the re-entering outlaws that the noise was only a boy with a drum "hunting squirrels by moonlight".
III.vi: Meanwhile, a resident of Segovia, showing the visiting Pedro the town, introduces him to the town's madhouse; there they encounter two keepers, an English madman, and the "she-fool" Kate, as well as the master of the place and two gentlemen examining a scholar, Stephano, who is being detained in the facility, and whom the gentlemen think shows no signs of being mad.
She pretends to be mad, much to the annoyance of Alphonso, who stalks off, and the amusement of Juletta, who is given a "nutmeg" that turns out to be a ring the maid recognizes after Alinda leaves.
Alinda, still in her fool's motley, approaches him thinking he is Pedro, but soon realizes her mistake and distracts the outlaw leader with more mad talk and by telling his fortune before getting away from him.
A disguised Juletta enters with a forged letter from the Duke of Medina, which she gives the Master of the madhouse, stating that Alphonso is lunatic and means should be used for his recovery.
Alphonso's obsession with finding the "boy" seems to bear out the letter, and the Master and Keeper take steps to secure the old man.
After they pay their vows, Pedro and Alinda unite, Alphonso is reconciled to the match, and the women's various previous disguises are revealed.
The cantankerous Alphonso has the last word: since a wedding is coming, "Give me some rosemary" — a traditional symbol of fidelity and love[4] — "and let's be going."