Cecily is studying with her governess, Miss Prism. Algernon arrives, pretending to be Ernest Worthing, and soon charms Cecily. Long fascinated by Uncle Jack's hitherto absent black sheep brother, she is predisposed to fall for Algernon in his role of Ernest (a name she, like Gwendolen, is apparently particularly fond of). Therefore Algernon, too, plans for the rector, Dr. Chasuble, to rechristen him "Ernest".
Jack, meanwhile, has decided to abandon his double life. He arrives in full mourning and announces his brother's death in Paris of a severe chill, a story undermined by Algernon's presence in the guise of Ernest.
Gwendolen now enters, having run away from home. During the temporary absence of the two men, she meets Cecily, each woman indignantly declaring that she is the one engaged to "Ernest". When Jack and Algernon reappear, their deceptions are exposed.