The three Rhinemaidens play in the water as Alberich, lord of the Nibelungs, watches on. His eye is caught by the glint of the gold that they guard, and he learns from the Rhinemaidens that it could be used to create a Ring of great power – but only if its owner renounces love. With his amorous advances rejected by the Rhinemaidens, Alberich makes this promise and seizes the gold.
Across the Rhine, the gods celebrate the creation of Valhalla, their fortress newly built by the giants Fafner and Fasolt. Wotan, ruler of the gods, is reminded of the payment he owes: the giants demand ownership of the goddess Freia in return. Loge tells them of an alternative: the gold that Alberich has stolen from the Rhine. The giants accept this arrangement, but hold Freia hostage as collateral. The gods begin to wither as she is led away. In the underworld of the Nibelungs, Alberich forces his brother Mime to hand over a magic helmet that can gift the wearer the ability to change shape. Wotan and Loge arrive, and Alberich threatens them with the Ring’s power. Alberich is tricked into changing into a toad, and is caught by Wotan.
Back up from Nibelheim, Wotan tears the Ring from Alberich’s finger who retaliates by cursing all who shall wear it.
Later, the giants return as their ransom is due. Unsatisfied with treasures and gold, they now insist on the Ring. Wotan is about to refuse, but the earth goddess Erda appears and convinces him to relinquish it, or to risk destruction. Freia is freed, but the giants fall victim to the Ring’s curse as they argue and Fasolt is killed in the struggle. Fafner leaves with the Ring.
As Wotan worries about the Ring’s curse, Donner swings his hammer summoning a storm. A bridge to Valhalla is created, and the gods make the crossing. The Rhinemaidens beg Wotan to return the Ring to them, and Loge, also fearing the curse, predicts disaster.