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The play opens in the city of Ephesus, with Solinus, the Duke of Ephesus, leading a merchant named Egeon to be executed. Egeon converses with the Duke, and we learn that he is a native of Syracuse, Ephesus' great commercial rival. Because of strife between the two cities, any Syracusan caught in Ephesus must pay an indemnity of a thousand marks, a price that Egeon is unable to meet, or face execution. He seems resigned to his death and declares that the execution will bring an end to his "woes." Curious, the Duke asks him to relate how he came to travel to Ephesus, and Egeon complies.
The merchant describes how he was born in Syracuse, and a wife, and prospered through trade with the neighboring city of Epidamnum. Eventually, however, his representative in Epidamnum died, leaving the business in disarray, and Egeon was forced to travel there to set his affairs in order. His pregnant wife went with him and gave birth to identical twin sons. At the same time, a poor woman staying in the same inn also gave birth to identical boys, and Egeon bought her newborns, intending to bring them up as slaves for his sons.
Unfortunately, on their return journey to Ephesus, Egeon recounts, their ship was broken apart by a storm, and the sailors abandoned them on the wreckage. His wife tied herself, with one son and one slave, to one of the masts, and he tied himself, the other son, and the other slave to a mast at the other end of the wreck. They floated for a time, while the sea grew calm, and then they saw two ships coming toward them--one from Corinth and one from Epidaurus. Before the ships reached them, however, they ran into a rock that split the wreckage in two, carrying Egeon in one direction and his wife in the other. Eventually, the Corinthian ship rescued Egeon and the one twin whom he was with, but they were unable to catch up to the Epidaurian ship, which had picked up his wife and his other son and carried them away.
When the son who remained with him had grown up, Egeon relates, the young man took his slave and set off into the world to find his brother and mother. Egeon himself followed suit, and his wanderings eventually led him to Ephesus, where he was willing to brave arrest and execution in the hopes of finding the missing half of his family.
The Duke, hearing this story, is deeply moved, and although he cannot violate his city's laws, he offers Egeon a day of liberty to find someone to ransom his life. Egeon's despair does not lift, however, since the task seems hopeless. Nevertheless, he sets about canvassing the city, searching for assistance.
These opening speeches, first by the Duke and then by Egeon, serve to locate the play both in a specific time and place and in relation to past events. The time and place is ancient Greece, with its rival city-states of Ephesus, Syracuse, Corinth, and Epidamnum; but it is an Elizabethan version of the Greek world, in which Christian references abound and English debt-officers co-exist with ancient practices of slavery. In other words, it is one of Shakespeare's imagined places, like the pre-Christian England of King Lear and Cymbeline.