The play opens as a young woman, Lady Windermere, arranges roses in her morning-room in London. Her butler, Parker, announces that Lord Darlington has arrived to see her, and she permits him to come in, emphasizing that any guests are welcome to visit. Lord Darlington enters and admires Lady Windermere’s beautiful fan, which she says was a birthday gift from her husband. The party she’s throwing that evening is in fact in honor of her birthday. Lady Windermere then chastises him for giving her so many effusive compliments and tells him that she thinks he pretends to be a very bad man when he’s actually a very good one. Lord Darlington goes on to tease Lady Windermere about her rigid ideas of morality and says that he wishes for them to be very good friends. She defends her views and emphasizes that bad people should never be forgiven for their mistakes.
Parker announces that the Duchess of Berwick and her daughter Agatha have also arrived to visit. After bantering a bit with the women, Lord Darlington exits. The Duchess then reveals the real reason for her visit: she’s come to tell Lady Windermere about rumors that her husband, Lord Windermere, has been frequently visiting and even making payments to a scandalous woman named Mrs. Erlynne. The Duchess says that all the men in London society—even her own brother, Augustus—are enamored of Mrs. Erlynne, despite her mysterious past and lack of family connections. Lady Windermere refuses to believe that her husband would do such a thing, but the Duchess insists that it’s true and advises her to take Lord Windermere out of town to distract him. The Duchess and Agatha—who has barely said a word the entire time—exit.
Alone, Lady Windermere discovers, to her dismay, a locked bank book that turns out to hold proof of her husband’s payments to Mrs. Erlynne. Lord Windermere enters and she confronts him, but he swears that she’s misunderstanding the situation. Lady Windermere refuses to listen and says that she feels bitterly betrayed. At his point, Lord Windermere confesses that he needs a favor from her: he wants her to invite Mrs. Erlynne to the party so that she can be accepted back into polite society. He says that Mrs. Erlynne has made mistakes in the past but deserves this second chance. Horrified, Lady Windermere refuses, at which point Lord Windermere sends the invitation himself. Lady Windermere swears that if Mrs. Erlynne does come, she’ll hit her across the face with the fan. Alone at the end of the act, Lord Windermere despairingly wonders what to do, since knowing Mrs. Erlynne’s real identity would be devastating to Lady Windermere.
The second act opens on the party that same evening. Guests arrive, including Dumby, Cecil Graham, Lady Plymdale, and the Duchess and Agatha. Lord Darlington is also in attendance, along with Augustus, who takes Lord Windermere aside to ask his advice: Augustus is in love with Mrs. Erlynne, but doesn’t know what to do given her lack of family relations. He’s relieved to hear that she’ll be at the party; everyone recognizes that an association with Lady Windermere marks one as respectable. Eventually, Mrs. Erlynne arrives, looking glamorous. Lady Windermere drops her fan in shock and greets Mrs. Erlynne politely. Then, calling herself a coward, she exits with Lord Darlington. The other guests gossip excitedly about Mrs. Erlynne, who quickly ingratiates herself with them; she charms Cecil Graham’s respectable aunt Lady Jedburgh and spends her time dancing with Lord Windermere in order to make Augustus jealous.
Meanwhile, Lady Windermere confesses her distress to Lord Darlington, telling him how betrayed she feels by Lord Windermere and saying that she does need a friend after all. Lord Darlington says that she can’t stay with a husband who treats her so disrespectfully, and when she agrees that that might be true, he confesses his love for her. She is horrified, telling him that she can’t possibly run away with him. Disappointed by her rejection, Lord Darlington leaves, saying that he’s departing England in the morning and won’t see her again.
The party winds down, with many of the guests expressing their admiration of the charming Mrs. Erlynne. Agatha gets engaged to Mr. Hopper, to the Duchess’s delight. It also becomes clear that Augustus has proposed and Mrs. Erlynne is planning to accept; she takes Lord Windermere aside to ask him about the money that he’s promised to give her for her marriage. Watching them walk away together, Lady Windermere is furious and humiliated. She decides that she was wrong to turn Lord Darlington down and writes a letter to Lord Windermere, telling him that she’s leaving. After she exits, Mrs. Erlynne finds and reads the letter and exclaims in dismay that history seems to be repeating itself; she once wrote a similar letter to Lady Windermere’s father. Keeping the letter, she tells Lord Windermere that Lady Windermere has gone to bed. Then, she takes Augustus aside and says that if he wants her to accept his proposal, he’ll need to take Lord Windermere out to the club and keep him busy.
The third act opens with Lady Windermere alone in Lord Darlington’s rooms, miserably wondering if she’s doing the right thing. She is astonished when Mrs. Erlynne enters and begs her to return home to her husband. Lady Windermere angrily refuses, saying that she might have if it weren’t so infuriating to see Mrs. Erlynne again. Mrs. Erlynne continues to plead, insisting that Lord Windermere loves Lady Windermere and that her life will be ruined if she runs away with Lord Darlington. Lady Windermere continues to refuse, but she finally gives in when Mrs. Erlynne makes an emotional appeal to Lady Windermere’s role as a mother and to her love for her young son. The two prepare to leave, but then they hear men’s voices approaching. Mrs. Erlynne tells Lady Windermere to hide and they both conceal themselves.
Lord Darlington enters with Augustus, Lord Windermere, Dumby, and Cecil Graham. They lament that the club made them leave, while Lord Windermere tries to tell Augustus that he has to go home. Augustus insists that Lord Windermere stay and the conversation turns to Augustus’s love for Mrs. Erlynne. They argue about whether or not she’s wicked, what her lack of family relations means, and whether the difference between good and wicked women even matters. Cecil notes that women will always think men are bad, with which Lord Darlington passionately agrees; he confesses to being in love with a “good woman” who won’t have him. Moments later, Cecil notices a fan—Lady Windermere’s—lying on the sofa and points it out, laughing that Darlington has talked of love while hiding a woman the whole time. Lord Windermere recognizes the fan and furiously asks Lord Darlington what’s going on, threatening to search the rooms. Just then, Mrs. Erlynne bursts out and apologizes for taking the fan accidentally from the party. While the men are distracted by Mrs. Erlynne, Lady Windermere slips out unnoticed.
The fourth act begins the following day with Lady Windermere again alone in her morning-room. She feels that she must tell Lord Windermere what happened and dreads doing so, thinking that talking about it will be even worse than experiencing it. Lord Windermere enters and tells her she was right about Mrs. Erlynne. Lady Windermere protests that Mrs. Erlynne isn’t actually a bad person and says she has to tell him something, but he cuts her off, saying that she should stop worrying about Mrs. Erlynne and focus on their upcoming trip to the countryside. Lady Windermere remarks that good and bad people are really much harder to distinguish than she once thought.
Parker enters and announces that Mrs. Erlynne has brought the fan back, and Lady Windermere—over Lord Windermere’s protests—asks Parker to send Mrs. Erlynne inside. Mrs. Erlynne arrives and apologizes for accidentally taking the fan, then announces that she’s going to be moving away from England. She asks for a photograph of Lady Windermere and her baby to remember them by, and Lady Windermere leaves to get one. Lord Windermere angrily accuses Mrs. Erlynne of blackmailing him and says that he plans to tell Lady Windermere the truth: Mrs. Erlynne is really Lady Windermere’s mother, whom she thinks is dead, and she exploited Lord Windermere’s love for his wife in order to get him to help her back into polite society. Mrs. Erlynne admits to taking advantage of her daughter’s wealthy husband but refuses to apologize; she simply took the opportunity she saw. She also tells him that if he tells Lady Windermere the truth, she’ll make her own reputation so horrible that Lady Windermere will be miserable forever. Lord Windermere is disgusted, but Mrs. Erlynne maintains that she loves her daughter and, though she doesn’t want to play the role of mother, she wants to protect her from pain by concealing the truth.
Lady Windermere returns with the photograph. Mrs. Erlynne notes that Lady Windermere seems very fond of her deceased mother, and Lady Windermere confirms that her mother is the priceless ideal she always tries to live up to. Lord Windermere goes to call Mrs. Erlynne’s carriage and the two women share a tender moment alone. Lady Windermere still wants to tell Lord Windermere the truth, but Mrs. Erlynne convinces her not to, saying that she should always prioritize her happy marriage and her role as a mother. She also asks if she can keep the fan and Lady Windermere happily agrees, noting how fortunate it is that the two of them share the same first name, Margaret.
Augustus arrives just as Mrs. Erlynne is leaving and she asks him to walk her out, bidding Lord and Lady Windermere goodbye as she goes. Alone, Lord and Lady Windermere confirm their love for each other and look forward to seeing the roses at their house in the country. Augustus returns and startles them by saying that Mrs. Erlynne has told him everything: she only went to Lord Darlington’s the previous night to look for Augustus, because she wanted to accept his proposal. Delighted, Augustus tells them that the two are engaged and will be moving away from England together right away. Lord Windermere tells him that he’s marrying “a very clever woman” and Lady Windermere adds that she’s “a very good woman.”