Count Waldner and his family are on the brink of financial ruin. The father Theodor loses the last of his money gambling, the mother Adelaide pawns all her jewels to pay a fortune teller to predict her future. With a series of creditors on their heels, the family has moved into a hotel. Their last hope seems to be marrying off their daughter Arabella as lucratively as possible. However, her sister Zdenka is forced to disguise herself as a boy because – so Adelaide claims – there is not enough money to bring up two daughters properly.
Arabella has enough admirers: three rich Counts – Elemer, Dominik and Lamoral – court this young woman tirelessly. The young officer Matteo is also in love with Arabella and believes he has a chance with her after he receives a love letter. What he does not know is that Zdenka, alias Zdenko, who has become Matteo’s friend and confidante, is actually in love with him and she has forged the letter. Unable to confess her own affection for Matteo, Zdenka pretends that Arabella returns his love, so that he will at least remain close to her.
Arabella, however, wants nothing to do with Matteo. She is convinced that she has yet to meet “the one”, even though she is under pressure to choose a future husband that night at the Carnival ball. Through her window she shows Zdenka a stranger whom she has already met in the street and who has made a strong impression on her.
This stranger is Mandryka, the nephew and sole heir of a Slavonian from Count Waldner’s old regiment, whom the Count has already considered as a potential son-in-law on account of his large fortune and to whom he sent a photograph of Arabella, not knowing that his former comrade has since died. Now young Mandryka stands at the door. He received Waldner’s letter and has been so taken with Arabella’s photo that he can no longer think of anything else but her. He has come to Vienna to ask for her hand. Waldner is delighted and promises Mandryka he shall have his daughter without hesitation.
At the Carnival ball, Arabella and Mandryka get to know each other for the first time and are quickly drawn to each other, even though their conversation is repeatedly interrupted by the Counts Dominik, Elemer and Lamoral, who all ask Arabella to dance. Mandryka tells Arabella of his wife who died young and his life in far-away Slavonia. Arabella believes that she has now found “the one”. The couple become engaged, but Arabella has one more wish: during the ball she would like to have an hour to herself in order to take leave of her suitors and her girlhood in one last dance.
The party becomes increasingly lively: surrounded by yodelers, the coachman’s mascot Milli crowns Arabella Queen of the Ball, Mandryka treats his future mother-in-law and the guests at the ball with champagne and Count Waldner indulges his gambling addiction.
During all this the desperate Matteo puts his supposed friend under such pressure that Zdenka ultimately passes him an envelope containing the key to Arabella’s room and tells him Arabella will be waiting there for him. Mandryka witnesses this conversation and be-lieves Arabella is cheating on him.
At the ball, the mood is increasingly out of control. When a note confirms that his bride has left the ball, Mandryka unleashes his jealousy in front of everyone present and in an act of revenge gets involved with the Fiaker-Milli. Count Waldner indignantly defends his daughter’s honour and declares he will return to the hotel immediately and demand that Arabella explain her behaviour. Mandryka is to accompany him.
Arabella has returned from the ball and meets Matteo. He is convinced that he has just been holding her in his arms in her hotel room and cannot understand why she is so aloof towards him. Mandryka bursts in upon them, accompanied by Adelaide and Count Waldner, and is now sure he has proof of Arabella’s infidelity. He wishes to cancel the engagement. Arabella is stunned. As she continues to protest her innocence, Count Waldner challenges Mandryka to a duel.
Suddenly Zdenka joins them and reveals herself to be a woman. She confesses it was she who was alone in the dark room with Matteo. In despair at her apparently hopeless situa-tion, she intends to throw herself into the Danube. Mandryka is ashamed of his error and to rescue Zdenka’s honour, he arranges her engagement to the baffled Matteo. For the Count and Countess Waldner everything has turned out well and scandal has been avoided. Mandryka believes he has lost Arabella. However, as a sign of reconciliation, she presents him a simple glass of clear water and seals with this Slavonian custom her engagement with Mandryka. Arabella seals her engagement to Mandryka in keeping with a Slavonian custom by passing him a simple glass of clear water. All the fortune teller’s prophecies have come true.