ACT I
The scene opens in the Ballroom of the Pontevedrian Embassy in Paris where Baron Zeta, the Ambassador, and his wife, Valencienne, are giving a party to celebrate the birthday of their Grand Duke.
Intrigue is rife amongst the guests until the men hear of the invitation of Madam Anna Glavari, the "Merry Widow", whose wealth and charm are known to all. This combination is irresistible to the men present, and two of the guests, Vicomte Cascada and Monsieur St. Brioche, at once become sworn rivals for her hand. Baron Zeta, however, has received instructions that her recently acquired fortune is to remain in Pontevedro, otherwise their country will be faced with bankruptcy. The solution is to re-marry her to a Pontevedrian as soon as possible, and with this in mind, Njegus, the Baron's factotum, is dispatched to find Count Danilovitsch, an eligible bachelor Attache.
Danilo arrives and, after repelling the ladies, is recognised by Anna as her former sweetheart. Their love is still strong, but Danilo's pride will not allow him to join the money-seeking retinue and he refuses to say "I love you" to Anna, who is determined that he will.
Meantime, Valencienne, whose affair with a young French Nobleman, Camille, Count de Rosillon, has reached a dangerous stage, decides that he too will join the suitors for the Widow's hand to avoid suspicion. Anna, using her wiles to reclaim Danilo, announces that she will give a party the following day at her home. Danilo, now at the commission of the Baron, sets out to eliminate all non-Pontevedrian suitors, which he does temporarily, and the end of the act finds them dancing alone.

ACT II
Anna's party is now in full swing, with guests singing the songs of their homeland. To the Baron, Camille now appears to be the foremost suitor for the Widow's hand, and gossip has already informed him that he is in love with a married woman, whom the Baron orders Danilo to trace, through a fan that has been found with the incriminating words "I love you" written on it (in Camille's handwriting), little realising that it belongs to his own wife, Valencienne. Danilo is careless with the fan, and Anna, finding it, thinks he has purposely left it for her. Though delighted, she is more determined than ever that he should speak the words written on it, to her. In the meantime Camille has persuaded Valencienne to meet him in the summer- house, and when the Baron is told that Camille is tete-a-tete with his lady love, he peeps through the keyhole and recognises his own wife. In the ensuing commotion Anna changes places with Valencienne and, when the couple are ordered to come out, announces that she has decided to marry Camille. The Baron is shattered to know that the millions are lost to Pontevedro, and Danilo is furious to find himself supplanted. He bids Anna a furious goodbye and departs for "Maxim's".

ACT III
Later that evening in the gardens, which have now been transformed into a semblance of "Maxim's", Anna's party continues. Valencienne entertains the guests by masquerading and dancing with the Grisettes. Danilo is tricked into attending the party, and he tells Anna that it is imperative she should give up Camille so that the money might stay in the Fatherland. She agrees, and confesses that the incident of the summerhouse was a ruse to save a friend, but, though given every encouragement, Danilo still cannot bring himself to say the words she longs to hear.
The Baron now discovers that the elusive fan belongs to his wife, and says he will divorce her to marry the Widow himself, but his ardour is rather chastened by Anna's statement that if she marries again she automatically loses her fortune. Hearing this, Danilo at once tells Anna that he loves her, and, having heard at last the words she has waited for, Anna adds the information that upon marriage the money becomes the property of her husband.
All that remains is for Valencienne to produce the fan and chide the Baron for not reading what she had replied to Camille's declaration. The Baron reads and is happily reassured of her fidelity in that she declares herself once more a "highly respectable wife".