19th century Vienna. Count Waldner, a retired cavalry officer, lives a life of extravagance well beyond his means and has a penchant for gambling. He is nearly broke, and won't be able to afford the cost of the formal social debut of his two beautiful teenage daughters – Arabella and her younger sister Zdenka. The Waldners's odd solution is to dress Zdenka in boy's clothes and call her by a boy's name: Zdenko. Arabella is a graceful young woman with no shortage of suitors. None, however, meet the criteria of Arabella's parents, who hope to marry her off to a rich man so they can escape their financial plight. Matteo, a young officer, is in love with Arabella, but she feels nothing for him. Zdenka in fact likes Matteo, but she tries to play cupid for Matteo and her sister. Mandryka, a wealthy landowner, arrives on the scene with a hefty dowry and offers to marry Arabella. Arabella falls for Mandryka instantly. He proposes to her at a ball on the last night of a carnival. Matteo sees that the two are in love and loses hope. Hoping to console Matteo, Zdenka gives him the key to her room, but tells him it is the key to Arabella's. As fate would have it, Mandryka overhears their conversation. He grows suspicious of Arabella, and everything is thrown into chaos. Zdenka eventually confesses that it was all her doing. The misunderstandings are cleared up and the secrets explained, as the opera ends happily with weddings planned between Zdenka and Matteo, and between Arabella and Mandryka.