The Duke calls Lord Angelo to grant him the temporary leadership of Vienna. Angelo modestly refuses, asking the Duke to test his skill in some smaller way first. The Duke tells him that his mind is already made up, and that he must leave right away.

Meanwhile, on a street, Lucio talks with two other gentlemen about recent events. They joke about the Duke's trip to meet with the King of Hungary and the war being carried out between Hungary and the Viennese city-state. The gentlemen, as soldiers, do not approve of the peace accord being proposed. Lucio compares them to a pirate going "out to sea with the Ten Commandments" having "scraped one out of the table" (I.ii.8-10): "Thou Shalt not Steal." The First Gentleman responds that it is against the pirates' nature to obey such a rule, and likewise it against the soldiers' nature to wish for peace.

The three men are still joking about venereal disease when, quite appropriately, Mistress Overdone approaches. She tells them that Claudio has been carried off to prison for impregnating Juliet. Lucio and the Gentlemen go off to find out more, and Pompey the clown enters.

Pompey tells Mistress Overdone that Claudio has been taken to prison for sexual involvement outside of marriage. Pompey also tells her that a proclamation shutting down all brothels in Vienna's equivalent to a "red-light district" has been issued. Brothels in the city proper are to remain operational, thanks to the political influence of a wealthy investor. Mistress Overdone worries about her business, but Pompey tells her that she will always have customers. They decide to leave just as Claudio approaches, led by the provost.

Claudio asks the provost why he is being taken to prison, and the provost replies that he is only following the orders of Lord Angelo. Lucio asks Claudio what he has done; Claudio replies that he has taken too many liberties and is being punished. Lucio asks for the specific offense, and Claudio hesitates.

Lucio guesses the crime, starting with murder and then moving to lechery. When Claudio replies that he is correct, Lucio asks, "Is lechery so looked after?" (I.ii.147), surprised that the penalty should be so high.