Gypsies steal a casket with a family medallion and a child from the house of the Corregidor, intending to raise a dancer from the daughter of noble parents to earn money.
Madrid's town square
Seniors, ladies, traders, peasants admire the dances of young gypsy women. Beauty Paquita leaves no one indifferent. The secretary of Correhidor Clemente asks her to fulfill a sonnet about love written by him, but Paquita does not respond to the poet's fervent confessions. The audience enthusiastically applauds the talent of the girl, and the old gypsy collects a reward. Officers and caballero Francisco de Karkamo appear with their son Andres. The young man can not take his eyes off the gipsy woman and confesses her love. Paquita asks the young man to prove his love: he must travel with Gypsies for two years, during which time she will check his feelings and, perhaps, give him his hand and heart. The enamored caballero changes his officer's uniform for gypsy clothes and leaves with a camp.
Gypsies introduce Andres to their customs. The young caballero is happy to master all the delights of a new life. A deep feeling is born between Paquita and Andres. Old Gypsy sends its wards to work.
Inn of a rich widow
Gypsies are invited to allay the widow’s sadness and to entertain distinguished guests, including the Correidor, with dances and songs. The daughter of the widow, Karduccha, is fascinated by the daring dances of the young gypsy and does not find a place for itself from the passion that has flared up in the chest. Having seized the moment, she confesses to Andres in her feelings, but he refuses the widow's daughter - his heart belongs to another. Offended Karducha conceives vengeance: she throws the family silver into the Gypsy cart.
Gypsy old woman says goodbye to the owners. But Karducha insists that it is necessary to search the things of artists before leaving - despite the excellent performance, the Roma’s reputation is not perfect. In the cart, they reveal other people's values and a casket that seemed familiar to the Correhidor. The officers are detaining a disguised caballero, and one of the servants of the law weighs Andres a hard slap. Unable to withstand the insults, the caballero snatches the sword from the officer and in the ensuing scuffle mortally wounds the offender. Correhidor orders to immediately arrest the young man. The one who joined as lover Paquita also finds herself in the hands of justice.
Andres and Paquita are imprisoned. They are mentally saying goodbye to each other and to life. The jailers chained Andres in shackles. Corihidor manages Pakhita with the old woman to deliver to her home.
Correhidor shows the casket found in the Gypsy's wife, donja Gyomar. She notices that the medallion stored in her is like two peas in a pod like the one captured in the portrait of her long-lost baby daughter. An old gypsy recalled that it was from this house that many years ago had kidnapped a little girl. Doubts are scattered: Paquita is the daughter of the Corregidor and Dona Gyomar. The girl begs for mercy on Andres.
Correhidor asks Andres to prove his noble origin. Caballero responds with a noble dance, not understanding how his secret was revealed. Correhidor talks about happy finding a daughter. The priest blesses the young.
Among the guests arriving at the celebration of the wedding Paquita and Andres, the father of the fiance Francisco de Karkamo, officers, gypsy girlfriends of the bride, all congratulate the newlyweds from young to old.