Two emissaries from the British royal court come to Vienna to study the waltz and bring the new style of music to London; one of them, Ilonka, is a former lover of Strauss's.

Katti and her harmonica-playing friend Susi fill in while Strauss forms his own ensemble; the two orchestras begin playing at the same time on adjacent pavilions, and the performance degenerates into a brawl.

While Victoria is impressed with Katti, she is denied the chance to perform at the ball, as Strauss refuses to share the stage with a women's orchestra.

Gustl is asked to perform a spirited impromptu waltz in honor of the royal engagement, and he serendipitously discovers Lanner's composition, written on Strauss's handkerchief, as he wipes his brow.

The assembled crowd in the courtroom divides into factions for Lanner and Strauss, and then erupts into a hubbub when a jail term is announced.

In order to placate the crowd, Strauss and Lanner begin composing a waltz together, burying their differences, and Katti and Gustl reunite.