Jakob Engstrand tries to convince his supposed daughter Regina to come work at the sailor's establishment he wants to open, but she is too proud of her job as Mrs. Alving's maid to do so. He leaves and Pastor Manders enters. The Pastor tries to convince Regina to help her father, while she pesters him to find her a position somewhere in high society. She leaves and Mrs. Alving enters. Oswald, Mrs. Alving's son, comes down. He has been traveling in Europe since he was young, and he has not been home in years. He and the Pastor get into an argument over living out of wedlock. He leaves, and the Pastor admonishes Mrs. Alving for letting her son grow up in such a way. He also blames her for once leaving her husband. Mrs. Alving replies that her husband made her miserable and that she sent her son away to save him from her husband's debauchery. She even admits to the Pastor that Regina is the love-child of her husband and their former maid, Johanna. As dinner is about to start, the two hear a cry from the kitchen. Apparently Oswald is making advances on Regina.
After dinner, the Pastor and Mrs. Alving discuss this strange development. The Pastor realizes that Oswald is furious at Engstrand for never telling him the truth about Regina. Engstrand enters and suggests to the Pastor that he hold a prayer meeting at the orphanage. The Pastor questions him, and Engstrand convinces him that it was only to save Johanna's reputation that he kept the truth from him. Engstrand and the Pastor leave, and Mrs. Alving goes to talk to her son. Oswald is drinking. She wants to tell him the truth about his father. He tells her about the sickness he is suffering from. A doctor in Paris diagnosed it by saying that the sins of the father visit the son. He goes on to complain about the misery and hypocrisy of gloomy Norway, contrasting it with the joy of life. Mrs. Alving is about to tell him and Regina the truth, but then they notice that the orphanage has caught fire.
Engstrand and the Pastor return to the house, announcing that the orphanage is lost to the flames. Engstrand convinces the Pastor that there will be a public scandal, blaming the Pastor for carelessly letting the prayer candles start the fire. He blackmails the Pastor into funding his sailor establishment, convincing the Pastor that it will be dedicated to the reform of sailors. They leave, and Mrs. Alving finally tells Regina and Oswald the truth about their father. Regina feels cheated and goes to claim part of her inheritance. Oswald is partly relieved but reveals to his mother that he is sick beyond hope. He shows her some morphine pills and asks her to administer them in case of a relapse. As the sun comes up, he melts into his chair and begins to mumble nonsense. Mrs. Alving desperately searches for the pills, having seemingly lost all hope for her son or anyone else.