At the bottom of the River Rhine, three Rhinemaidens guard an invaluable treasure: the Rhinegold. Alberich, the Nibelung dwarf, is enchanted by the girls’ beauty, but after they mock him, his interest shifts to the glittering gold. The girls carelessly reveal the gold's secret: whoever forges it into a ring can use its power to rule the entire world. In order to do this, however, he must also renounce love forever. Alberich curses love and seizes the gold.
Wotan, ruler of the gods, finds himself being scolded by his wife,Fricka: earlier he had offered Fricka’s beautiful sister, Freia, to the two giants, Fasolt and Fafner, in exchange for building the gods’ castle. The castle is now ready, and the giants are ready to claim their fee. Loge, the god of fire and Wotan’s counsellor, suggests a different form of payment: the ring that Alberich has made from the Rhinegold and all the treasure that the ring's power has given him. The giants take Freia away in pledge, and in her absence, the gods must do without her golden apples, which they require in order to preserve their youth and strength.
In order to find and obtain the ring, Wotan and Loge set off toNibelheim, home of the Nibelungs, in the depths of the Earth. There they meet Mime, Alberich’s brother. Under Alberich's control, Mime, has crafted the Tarnhelm, a magical helmet which enables the wearer to take on any shape, and even to become invisible. He tells Wotan how Alberich has subjugated the Nibelungs, forcing them to serve him. Alberich arrives and mocks the gods. Loge cleverly asks him to show how the Tarnhelm works: Alberich first changes into a dragon, and then into a toad, whereupon the gods seize him. After being led up to the earth's surface from Nibelheim and forced to turn over his treasure to the gods, Alberich watches Wotan take the ring as well. Alberich curses it: its bearer can look forward to eternal woe and death!
The giants return for the gold. The gods are compelled to give them the Tarnhelm as well, but Wotan is unwilling to part with the ring. Erda, goddess of the Earth, appears and warns him that the ring will cause the downfall of the gods. Wotan reluctantly hands over the ring, and Alberich’s curse claims its first victim: Fafner kills his brother while arguing over the treasure.
While the Rhinemaidens lament the lost treasure, the gods enter their new home, Valhalla.