Lady Windermere and Lord Windermere are a happy, young couple - married for just under two years with a six-month-old child. On the day Lady Windermere is throwing one of the last parties of the season for her birthday, two friends, Lord Darlington and the Duchess of Berwick, come by to see her and imply that her husband has been cheating on her with a woman named Mrs. Erlynne. This rumor has spread throughout society because he has supposedly been giving her large sums of money. When Lady Windermere checks her husband's books, she finds that this is true. Lady Windermere and Lord Windermere argue about this when he returns home, and Lord Windermere asks Lady Windermere to invite Mrs. Erlynne to her birthday party. Lady Windermere refuses, so Lord Windermere invites her himself.
When evening arrives, many guests attend the party. Mrs. Erlynne arrives and causes quite a stir, with people assuming Lady Windermere invited her. At the party, when Lady Windermere tries to go to Lord Darlington for support, he reveals his love for her and asks her to run away with him. When Lady Windermere does not agree, feeling confused and flustered by all the revelations of the day, Lord Darlington tells her that he will leave tomorrow and never see her again. While Mrs. Erlynne meets more people at the party and even presses Lord Windermere publicly for more money, Lady Windermere retreats to her room. In conversation and monologues from Mrs. Erlynne and Lord Windermere, it becomes clear that Mrs. Erlynne is Lady Windermere's mother, who abandoned her as a child.
Lady Windermere decides that she will run away with Lord Darlington, and she leaves a note for her husband before fleeing the party. Mrs. Erlynne finds the note and, realizing that her daughter is about to make the same mistake she did as a young woman, takes the note with her and goes to find Lady Windermere. She finds Lady Windermere at Lord Darlington's house and convinces her not to run away from her husband and, more importantly, her child. However, some men along with Lord Windermere then show up at Lord Darlington's house and the women must hide. Lord Windermere sees Lady Windermere's fan in the room where she is hiding, and Mrs. Erlynne must come out of hiding and say that she took the fan, allowing Lady Windermere to escape without being seen.
Back at home, Lord and Lady Windermere make amends and decide to take a holiday away from society. Lady Windermere does not want to leave without seeing Mrs. Erlynne to thank her, but Lord Windermere does not want them to meet because he fears Mrs. Erlynne will reveal her relationship to his wife. Mrs. Erlynne arrives at the house and speaks to both Lord and Lady Windermere, asking Lady Windermere for a photo of her to take since she is going away. She alludes to a connection by noting that they have the same Christian name when she asks if Lady Windermere will also give her the fan Lord Windermere recently gave her as a present. However, she does not reveal that she is Lady Windermere's mother. She leaves with Lord Augustus who comes back and announces that they are going to be married.
