The scene is set in Granada. Against the recurring refrain of a blacksmith’s song from a nearby smithy – ‘Alas for ill-starred wretches! Unlucky he who is born an anvil, not a hammer!’ – we see a young gipsy girl, Salud, waiting impatiently and dejectedly for her lover, Paco: her grandmother attempts in vain to comfort her. When finally he arrives, she falls into his arms, and in reply to her passionate appeals, he swears eternal fidelity. Even while they are locked in an embrace, however, Uncle Salvador comes in to tell the grandmother that he has discovered that Paco is to marry another girl, rich and of his own class, in a few days’ time. An orchestral interlude (with the occasional sound of voices) representing twilight over Granada brings the first act to a close.

The second act opens with the fiesta in Carmela’s house to celebrate her marriage to Paco; a folk-singer sings a soleá to guitar accompaniment, and there is a general dance by the guests (this dance is widely known out of its context, largely through transcriptions). Salud appears outside the windows and voices her grief at her betrayal; Paco, hearing her, is seized with remorse, but conceals his agitation. During another orchestral interlude the scene changes to the interior of the house, where dancing has recommenced (this section was added for the Paris production of 1914). Salud and her two relatives have come in; she pours out her story, and when Paco, fearful of a scandal, desperately denies it, she falls dead at his feet. The curtain falls as the gipsies call clown curses on Paco’s head.