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The palace of the Bey of Algiers
Elvira accompanied by her slave Zulma regrets the loss of the love of her husband, the Turkish Bey Mustafà. Left alone with Haly, Captain of the Corsairs, Mustafà reveals his plan to marry Elvira off to Lindoro, his Italian slave. The Bey is bored with his submissive harem, desiring a new challenge to his virility: he wants an Italian girl, and Haly must find one! Lindoro enters alone and sings about Isabella, his true love (Languir per una bella). Mustafà comes in to explain Lindoro's impending marriage. The enthusiastic Bey describes the attractions of the match, while Lindoro struggles to refuse (Se inclinassi a prender moglie).
A ship has been wrecked in a storm. Its passengers include Isabella, in search of Lindoro, and Taddeo, her travelling companion and would-be lover. Isabella enters with a sorrowful cavatina Cruda sorte! Amor tiranno!, however she is not afraid (Già so per pratica) and will master the situation. Haly and his men take them prisoner. She passes off Taddeo as her uncle. Haly is delighted to learn she is an Italian – exactly what the Bey wanted! Left to consider their fate, Isabella is irritated by Taddeo's jealousy of Lindoro (Ai capricci della sorte), but they resolve to join forces.
Back in the palace, Lindoro and Elvira do not wish to marry, but Mustafà offers Lindoro passage on a ship returning to Italy if he takes Elvira. Lindoro agrees, admitting a vague possibility of marrying her in Italy. Haly enters with news of the arrival of the Italian beauty. Mustafà is elated (Già d'insolito ardore nel petto agitare).
Surrounded by eunuchs (Viva, viva il flagel delle donne), Mustafà receives Isabella in a grand hall. He is enchanted, though she is rather amused by his appearance (Oh! Che muso, che figura!). At that moment, Lindoro, Elvira and Zulma arrive to say goodbye to Mustafà (Pria di dividerci da voi, Signore). Lindoro and Isabella are astonished to come face to face. Recovering herself, Isabella asks about Elvira, learning she is Mustafà's ex-wife, to be remarried to Lindoro! The act ends with an ensemble of confusion (Confusi e stupidi).
In the palace
Elvira and Zulma (who have remained in Algiers after all) note Isabella's skill with men. Mustafà reveals his strategy for seducing Isabella: he installs Lindoro as Isabella's servant and his informer, and Taddeo will also be induced to help. Elvira and Zulma must tell Isabella he is coming to take coffee with her.
Isabella and Lindoro are alone. He explains that he had no intention of marrying Elvira. They agree to escape together and Lindoro sings of his happiness (Ah come il cor di giubilo). Mustafà enters with a reluctant Taddeo, acclaimed by the Turks as "Lord Kaimakan" (Viva il grande Kaimakan). He dislikes interceding with Isabella for the Bey, but is frightened to refuse (Ho un gran peso sulla testa).
In her apartment
Isabella is dressing in Turkish style. Zulma and Elvira deliver Mustafà's message: he is coming for coffee. Isabella orders three cups. Elvira should wait in a side room. As Mustafà approaches, Isabella sings a romantic cavatina, Per lui che adoro - she will receive him. Mustafà tells Taddeo to leave when he sneezes (Ti presento di mia man). Isabella greets Mustafà warmly and he sneezes, but Taddeo ignores the signal. Isabella calls for coffee and then – to Mustafà's horror and amazement – invites Elvira to join them.
Elsewhere in the palace
Haly sings in praise of the women of Italy (Le femmine d'Italia). The Italians enter, and Taddeo reveals to a surprised Lindoro that he is not her uncle but her lover (he himself is unaware of the other man's true identity). Lindoro tells Mustafà that Isabella will declare him her adored pappataci (literally a "silent eater": a man unable to resist the opposite sex). This, as Lindoro explains (Pappataci! Che mai sento!), is an Italian custom and a great honour, as the pappataci enjoy an idyllic life dedicated to eating, drinking and sleeping. Zulma and Haly speculate about Isabella's real intentions and the quantity of alcohol ordered for the ceremony.
She addresses the Italian slaves who will be pappataci in the ceremony - she will lead them to freedom (Pensa alla patria). The ceremony begins (Dei pappataci s'avanza il coro); Mustafà is delighted with his new honour and changes into appropriate costume. Isabella explains his obligations. He must swear an oath of eating, drinking, and keeping silent, repeating the words after Taddeo. Following that his oath is tested, under provocation by Isabella and Lindoro.
A European ship lies alongside the palace: time to escape! Taddeo finally realizes who Lindoro is, but decides to go along with them anyway. Elvira, Zulma and Haly find the Bey still acting as a mad pappataci. Suddenly recovering his sanity, Mustafà calls his troops but they are all drunk. The Italians bid farewell and Mustafà begs Elvira's forgiveness. No more Italian girls for him!