Gypsies have set up camp on a river bank. Aleko is amongst the gypsies; it is now two years since he has turned his back on city life and roamed with the gypsies. An old gypsy, the beautiful Zemfira’s father, remembers the days of his own youth and unhappy love. Mariula remained faithful to him for just one year: abandoning her young daughter, she left him for another. The old man's tale draws a wrathful response from Aleko: he would never forgive such treachery and would attempt to take revenge.
The gypsies wish to dispel the gloom brought by the old man's tale with merry dancing. Zemfira, until recently passionately in love with Aleko, has grown weary of him. As the camp settles down for the night the girl agrees to meet her new lover, a young gypsy. Rocking a cradle, Zemfira sings about an old, jealous and unloved husband. "I'm singing a song about you," she snaps at Aleko. As night falls, Zemfira leaves.
Aleko sinks into bitter contemplation. An exile, "scorning the fetters of enlightenment", it seemed that he had already found happiness among the freedom-loving gypsies. But the idea of Zemfira's infidelity makes him despair. In the distance the young gypsy can be heard singing. Dawn breaks. Zemfira bids her lover farewell. She makes haste, but Aleko is already there. In vain he tries to reawaken Zemfira's love and, overcome with jealousy, he kills the lovers. The gypsies rush to the scene on hearing the commotion. Zemfira's father and the rest of the camp demand that the killer leave them. Aleko despairs – he is alone once more.