In the palace in Stockholm, Sweden, a group of court members are waiting for King Gustavo III to enter. Count Horn and Count Ribbing are the leaders of a group that are conspiring against the king, hoping for his downfall, and the uprising of a new King. As the King enters, he notices the name Ameila on the guest list for a masked ball, the wife of his secretary and best friend, Count Anckarström. King Gustavo is secretly in love with Amelia. After the rest of the members of court have left the room, Gustavo is alone with his friend, Anckarström. He warns the king that there is a conspiracy against him, and he should be careful, but Gustavo brushes off the threat.
The young page, Oscar, comes to tell the King that a fortune teller, Madame Ulrica Arvidsson, is to be banished for witchcraft. Curious, the King, decides to go see the fortune teller for himself, and gathers the court members to go with him for a visit in disguise.
The fortune teller, Madame Ulrica, calls upon the spirits to tell her about the sailor Cristiano; she states that he will become wealthy after receiving a promotion. Cristiano is overjoyed, and everyone praises Madame Ulrica’s powers. Meanwhile, King Gustavo arrives with his entourage, incognito, and slips money into Cristiano’s pockets. Gustavo stays hidden away as Madame Ulrica sends everyone