Tonio, an actor, introduces himself (“Io son il Prologo”) and delivers a message from the author. Tonight's play will be something different. It will be a story about real people with real struggles—it will be true to life. Inspired by the playwright’s own memories, the play is filled with powerful human emotions set to the music of sobs and tears. Tonio ends his curtain speech, crying out “Andiam! Incominiciate (Come then! Let the play begin)!”
On a hot summer afternoon, a touring troupe of actors arrives at a village in southern Italy and are greeted by the townspeople, shouting that Pagliaccio (the clown) has returned. The villagers sing a chorus of welcome (“Viva Pagliacco”) as Canio, Nedda and their traveling troupe of street performers arrive. Canio addresses the townspeople and invites them to attend the play about the great Pagliaccio at eleven o'clock that night. Canio and Beppe accept the villagers’ invitation for a drink, while Tonio remains behind. When a villager suggests Tonio has his eye on Nedda, Canio warns them that, unlike his stage persona, he would never forgive an unfaithful wife. Bagpipes and bells announce evening vespers, and Nedda is left alone.
Disturbed by Canio’s warning, Nedda wonders if he suspects her and sings about the freedom of flight in a flock of birds, wishing she could join them (“Stridono lassù”). Interrupted by Tonio, she fends off his amorous advances with laughter, and then with force. Proclaiming that he will have revenge, Tonio goes off to fetch Canio. Nedda’s lover, Silvio, arrives, urging her to run away with him that evening. She eventually agrees, using a line from the play “Until tonight, then I will be yours forever.” Tonio and Canio arrive in time to hear their plans, Canio attacks them, and Silvio just manages to escape. Canio demands that Nedda tell him the name of her lover and threatens her with a knife. Tonio and the rest of the actors step in to protect her, reminding Canio that it's time to prepare for tonight's performance. Canio gets ready, singing the great aria “Vesti la giubba.” While putting on his costume and make-up, he realizes that he is trapped in the role of Pagliaccio, the jilted husband, and must entertain the crowd while he's dying inside.
An eager crowd gathers to watch the play: Columbina and Arlecchino plotting to outwit Pagliaccio. Arlecchino serenades Columbina from outside her window, and Taddeo brings supper for them to enjoy. Arlecchino suggests a sleeping potion to eliminate a jealous husband. Pagliaccio comes home early, and overhears “Until tonight, then I will be yours forever.” Canio breaks character and demands to know who his rival is. Nedda attempts to return to the play, but Canio errupts. His threats are all too real. The play is over.