Henry enters the court with his various lords. Suffolk has returned from France with Margaret, whom he presents to the king as his new wife. He also brings a peace treaty from France, which Gloucester reads. He falters when he comes to a passage about the French keeping the territories of Anjou and Maine in return for Margaret. Gloucester is upset at this loss of land, once hard-won by Henry V and by the other lords in recent French wars. He prophecies the imminent loss of France and leaves. Beaufort speaks against Gloucester, suggesting to Buckingham and Somerset that they plot to oust him. Salisbury and Warwick talk with York about trying to suppress the influence of Suffolk and Beaufort, two ambitious and prideful nobles. York, left alone, speaks of his belief in his claim to the throne and his frustration that Henry willingly allows lands that are rightfully his own to be returned to the French. Yet he can't make his claims yet; he plans to side with Warwick and Salisbury.
Gloucester speaks to his wife, the Duchess. He had a dream that his staff of office was broken, but she dreamed that she was about to be crowned queen. He urges her not to speak of her excessive ambition, since she is already the second woman in the kingdom, behind Margaret. Hume enters, and the Duchess and Hume discuss her desire to hire a witch and conjurer to summon spirits to ask about the future of Henry's reign.
Petitioners come to the court to ask for Gloucester's help. They encounter Suffolk and Margaret and believe Suffolk is Gloucester. One petitioner, Peter, accuses his boss of saying York is the rightful king, and Suffolk sees he has found a way to weaken York. Henry and his court enter, discussing who should be the regent of English forces in France. Gloucester suggests York, but after hearing Peter accusing his master Horner and casting doubt on York, he recommends Somerset. Margaret insults Gloucester and asks him why he is still protector of the kingdom; she also insults the Duchess. Gloucester suggests that justice will be best served by single combat between Peter and Horner.
The Duchess welcomes the Witch and the conjurer, Bolingbroke. They summon a spirit and ask it Margaret's questions about Henry's rule. The spirit gives ambiguous replies, then York, Suffolk, and Somerset enter and arrest the Duchess for dabbling in the occult.
Henry and his queen and lords are hunting. Gloucester and Beaufort bicker. They meet a poor man who claims to have had his sight restored by miracle, but Gloucester sees he is lying and chases him away, "curing" his lameness, too. Then, Buckingham arrives with news of the Duchess' arrest.
Richard speaks to Warwick and Salisbury, explaining the complex family tree that makes him the more rightful heir to the throne than Henry. Both men believe him, call him the true king, and swear allegiance.
Henry and his lords judge the Duchess and her sorcerers. She is banished and ordered to do penance by being led through the streets of London before departing. Gloucester gives up his staff and his office. Then, Peter and Horner enter for their combat. Peter thinks he can't fight, but he is able to defeat and kill Horner, who arrives drunk. Later, Gloucester waits in the street to see the Duchess paraded through the streets. She warns him that the lords are out to get him, but he says he has always been honorable and, thus, is above blame. He bids farewell to his wife.
Henry holds a meeting of the lords outside London, and Somerset enters to report that all the French lands have been lost. Gloucester arrives late, and Suffolk arrests him for treason. The lords all accuse him of wrongdoing. Henry says he hopes Gloucester can prove his innocence, but Gloucester says the lords have all plotted against him, and he will not be able to defend himself. Gloucester is taken away, and Henry mourns his inability to defend an innocent Gloucester against the plots of the lords. He departs; the other lords discuss how they shall come up with an excuse to kill Gloucester. A messenger arrives with news of rebellions in Ireland; York is sent to take care of them and given an army. Left alone onstage, York revels in the turn of events; all he had lacked was an army and now he has one. While he is in Ireland, he has hired Jack Cade to raise trouble in England, to say he is a York with a claim to the throne, to see what is the public response to such a gesture. If it's positive, York will return and take over himself.
Gloucester is killed by murderers at his home. Henry and his lords arrive for his trial, but Suffolk announces that Gloucester has died. Henry is distraught. Warwick and Salisbury enter with reports of unsettled commoners, who suspect Gloucester was murdered. Examining the body, they decide that Gloucester died in struggle and was murdered. The commoners ask for the death or banishment of Suffolk. Henry grants their wish, and he orders Suffolk to leave the country. Left alone, Margaret and Suffolk declare their feelings for each other. She says she will try to have him returned or will be banished, too. He says he can't live without her and wants to stay. She sends him away.
Meanwhile, Beaufort has been taken ill, raving in his bed. He dies miserably, signifying bad behavior during his life. Suffolk is captured at sea but refuses to plead for his life. He insists he can't be killed by such lowly men, but Suffolk is beheaded.
Cade speaks to his army of commoners, claiming to be the heir to the throne and promising many changes in a new England. He promises to honor only workmen, not artisans or people who can read. Stafford and his brother arrive with an army to convince Cade and his men to lay down their arms, but the two armies come to blows. Stafford and his brother are killed, and Cade drags their bodies to London.
Margaret holds Suffolk's disembodied head and mourns him. Henry listens to reports of Cade's attack, and he determines to leave the city temporarily. Cade attacks London, hunting for and killing Lord Saye, who Cade accuses of ruining England with literacy. Cade's rabble asks Cade to create new, spoken laws. Cade wreaks havoc on London, until Buckingham and Clifford arrive, reminding the commoners of the honorable rule of Henry V. Soon, the rabble abandons Cade, who flees. Henry forgives the commoners and receives word that York's army marches from Ireland, demanding the imprisonment of Somerset, who York claims is a traitor. Meanwhile, Cade is starving in the countryside; he steals food from Alexander Iden's garden. Iden arrives, and Cade threatens him. The two come to blows, and Cade is killed.
York marches near London with his army. Buckingham arrives to ask about his intentions. York claims he only wants Somerset imprisoned. Buckingham says he has been, so York dismisses his army. Henry enters, followed by Margaret and Somerset. Seeing Somerset free, York can contain himself no longer; he accuses Henry of being a weak, unfit king, and he declares himself to be the rightful heir to the throne. Somerset orders York's arrest. York refuses to budge and asks for his sons Edward and Richard and Salisbury and Warwick to speak on his behalf. Salisbury and Warwick declare their allegiance to York. Henry agrees there is nothing left to do but fight.
Richard fights with Somerset and kills him. Then, he fights with Clifford and kills him. York's army is winning, so Margaret urges Henry to flee back to London, where he has support. After the battle, York declares victory, but his enemy has fled. So he, with Edward and Richard, Salisbury and Warwick, prepare to enter London.