Gloucester and his wife, Eleanor, the Duchess, talk. She asks why he is so gloomy. Does he dream of Henry's throne, she asks. Gloucester tells her to banish such ambitious thoughts, explaining his bad mood comes from his unsettling dreams. He saw his staff, the badge of his office, broken in two, and impaled on the end of each half were the heads of Somerset and Suffolk. The Duchess, too, has had dreams; she saw herself in Westminster Abbey, about to be crowned as queen, with Henry and Margaret at her feet. Gloucester, astonished, chides her, reminding her that she is the second woman in the realm, behind only Margaret. He demands that she must not hatch any treachery that will bring harm to him.
A messenger enters, asking Gloucester to join the king at Saint Albans, where the lords are hunting. He leaves. The Duchess considers how, if she were a man, she would much more easily remove the stumbling blocks between her and the throne. But, being a woman, she must play a role. She calls in Sir John Hume and asks him if he has spoken with the witch and conjurer to ask them to advise her about the future. Hume says they have promised to raise a spirit to answer all the questions. She gives him money to complete the deal and she leaves. Hume remains, pondering that the Duchess has given him gold to hire a witch, while Beaufort and Suffolk have also given him gold to help undermine the Duchess and urge her to dabble in the occult. He's playing both sides, he realizes, and he will bring about the fall of Gloucester through the ruin of the Duchess.
Several petitioners, including Peter, enter the palace, searching for Gloucester, whom they believe to be a good man who can help them. Suffolk and Margaret enter; one petitioner believes Suffolk is Gloucester, but another insists it is Suffolk. Suffolk asks what the petitioners want. One petitioner offers up his complaints. Realizing they are addressed to Gloucester, Margaret eagerly reads the papers. The second petitioner's complaint is against Suffolk, but nothing interests Suffolk until he hears Peter's complaint against his master, Thomas Horner, who Peter claims has said the Duke of York is the rightful heir to the crown. Suffolk pays attention to Peter and sends him off to make his complaint formally. Meanwhile, Margaret rips up the other petitioner's papers.
Margaret asks Suffolk if court details are normally dealt with by Gloucester instead of Henry; as the queen, must she be subject to the rulings of a mere duke? She tells Suffolk that she thought Henry would resemble Suffolk in bravery and seductiveness, but Henry is weak and more concerned with prayer and his religious life. Suffolk tells her to be patient; just as he was the cause of her becoming queen, so he will make things work out for her in England. The two discuss all their enemies, from Beaufort and Gloucester to Somerset, Buckingham, and York, and finally Salisbury and Warwick. Plus, says Margaret, there is the Duchess to worry about; Margaret can't stand the Duchess's haughty manner, behaving as if she is the highest lady in the land. Suffolk says he has set a trap for her already. And while they don't like Beaufort, they must side with him until Gloucester has come to disgrace. And as for York, Peter's complaint may help bring him down. So little by little, they will weed out their enemies.
Henry enters with York and Somerset, followed by Gloucester, the Duchess, Buckingham, Salisbury and Warwick, and Beaufort. York and Somerset disagree over who should become regent of France, while Henry says he doesn't care who gets the job. The other lords join in, suggesting their preferred candidate. Gloucester says the king should decide, but Margaret demands to know Gloucester's role now that Henry is of age. He reminds her that he is the protector but willingly would resign if she wishes. Suffolk, Beaufort, Buckingham, and Margaret accuse Gloucester of making a mess of the kingdom. Gloucester, insulted, leaves. Then, Margaret drops her fan and asks the Duchess to pick it up, punching her in the ear when she leans down. The Duchess is enraged, promising revenge, and storms out. Gloucester returns, calmed, and urges the king to make York the regent of France. York says he would be a bad candidate for regent, for Somerset's delay in providing him with men and equipment would delay him until France fell to the king of France.
Horner and Peter enter. Suffolk explains that Peter accuses Horner of saying York was the rightful heir to the throne. Horner denies such accusations, but Peter repeats them. York asks for justice in treatment of these villains. Horner suggests Peter's accusations come from anger at Horner correcting Peter's work. Gloucester recommends that Somerset become the regent of France, as the case brings suspicions against York. And he recommends that Horner and Peter settle their differences in armed single combat. Henry agrees and Horner is satisfied, but Peter is hysterical; he doesn't know how to fight and worries he will die. The two men are taken to prison to await their battle.
At Gloucester's house, a Witch and Bolingbroke, a conjurer, arrive with Hume. They discuss the Duchess and suggest that she watch their work from above, with Hume. The Duchess enters above and greets them. They begin their ceremony with Bolingbroke's incantations. A spirit appears and says that he will answer their questions. Bolingbroke reads from a list of questions, asking first what will become of Henry. The spirit responds: "The Duke yet lives that Henry shall depose, / But him outlive, and die a violent death" (I.iv.29-30). Bolingbroke asks about the fate of Suffolk, who the spirit says will die at sea. The spirit says Somerset should avoid castles. Then, the spirit sinks into the ground, with thunder crashing.
York and Buckingham enter with soldiers. York orders the arrest of the conjurers. Finding the written questions, Buckingham orders the Duchess' arrest. All are led away, and Buckingham and York read Bolingbroke's questions. Buckingham asks if he may ride to Saint Albans and tell the king and Gloucester about the Duchess' arrest.
Even if Gloucester is an honorable man, he is alone among a crowd of plotters and schemers. Even his wife has designs upon the throne. It is her ambition that Beaufort and Suffolk will use to begin bringing Gloucester down, cleverly paying off Hume to urge her to make use of occult forces.
The petitioners who seek Gloucester firmly believe in the power of the upper classes to put things right in the lives of the common people, and they want Gloucester to help fix their problem. Yet mistaking Suffolk for Gloucester provides Suffolk with an opportunity to weaken York, while it ruins the petitioners' chance to solve their grievances. Margaret speaks of the surprising weakness of Henry; it is clear to her that she must gain power in other ways than through her husband. Margaret and Suffolk want to bring down everyone in each faction; they have a long struggle for power before them.
Gloucester advises justice will be served in the case of Peter and Horner if the two men engage in single combat, which startles Peter. After all, he only wanted to get his master in trouble, he didn't want to fight. This kind of trial shows the idea of justice has become a farce, and the lords think it's easier to have the petitioners fight it out than to listen to their complaints and hold a real trial.
The debate between Somerset and York to be regent of France refers to a time during the French wars, when York was regent of France and Somerset delayed sending troops to York. York says if he were to become regent now, France would surely fall because of Somerset's lack of aid.
The Duchess' questions to the spirit elicit ambiguous responses. The syntax of the reply suggests that a duke is alive who Henry shall depose or who shall depose Henry. This duke is probably York, though the spirit's replies are too vague to comprehend. Since practicing the occult was illegal in this time, the Duchess is arrested, and Gloucester will be held to blame for her behavior.