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The novel opens in the new opera house, where all of New York's high society has assembled in its expensive box seats to see and to be seen. Newland Archer, the protagonist, has just arrived fashionably late and joins his friends in time for the climax of the opera. As he glances across the filled theater, he spots May Welland, his new fianceé, seated in the box of her aristocratic old grandmother, Mrs. Manson Mingott. Archer, struck anew by her pure and innocent beauty, dreams of blissful married life with May.
His reverie is abruptly interrupted by his acquaintance Larry Lefferts, who notices a stranger entering the Mingott box. A slim young woman wearing a theatrical and low-cut dress takes a seat in the box, seemingly unconscious of all the attention she attracts. With shock, Archer realizes that this woman is no other than the Countess Ellen Olenska, cousin to May Welland, who has returned to New York after having lived abroad for many years. Lefferts, considered to be the authority on "form," or style and fashion, and Sillerton Jackson, the unofficial archivist of all family histories and scandals within the upper class, are both shocked that the Countess would appear in good society with the rest of her family. We learn through their gossip that it is rumored that she had left her unfaithful husband, a Polish count.
Newland admires the fiery and somewhat unorthodox determination of Mrs. Manson Mingott to support this 'black sheep' of her family by not only hosting her indefinitely in her home, but also by allowing her to appear publicly in the family box at the Opera. Yet at the same time he is bothered that all of New York society will see such a scandalous figure sitting next to his innocent young fiancee. As the men continue to gossip, Archer feel compelled to take decisive action. As the fiancé of May Welland, he decides that he has the responsibility to defend the Mingott clan.
During intermission, he hurries over to the Mingott box. Although no words are exchanged between May and himself as to the reason for his sudden appearance, she shows her understanding of the situation and her gratitude to Archer with her smile. Both she and Archer are aware that by appearing in the Mingott box with the Countess Olenska, Archer is demonstrating his connection to that family and his support of their decision to include the Countess in their social activities. Archer is introduced to Olenska, who was one of his childhood playmates. He is struck by her flippant, friendly manners and finds her descriptions of New York society rather disrespectful.
After the opera, many of the wealthy New York families attend the annual ball at the Beaufort residence. Julius Beaufort, we learn, is a handsome, charming, and disreputable Englishman with a shady financial history and a strong tendency toward infidelity; his wife Regina is a pretty but dull woman of reputable family background. Although many consider the Beauforts to be "common," no one would ever pass their elaborate and ostentatious balls, which provide a cornerstone for New York social activities.
At the ball, Archer and May officially announce their engagement. In a moment alone together in the conservatory, they express their happiness. May suddenly asks Archer to announce their engagement to her cousin Ellen Olenska. Ellen, to the relief of her family, did not attend the Beauforts' ball.
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