Expressing his sense of the condescension shown to him by Pooh-Bah, that portly personage explains that although "a particularly haughty and exclusive person" who can trace his ancestry back to "a protoplasmic, primordial, atomic globule," he mortifies his family pride. In proof of this he points out that, when all the other high officers of State had resigned because they were too proud to serve under an ex-tailor, he had accepted all their posts (and the salaries attached) at once, so that he is now First Lord of the Treasury, Lord Chief Justice, Commander-in-Chief, Lord High Admiral, Master of the Buckhounds, Groom of the Back Stairs, Archbishop, and Lord Mayor.

Pooh-Bah informs Nanki-Poo that Yum-Yum is arriving from school that very day to be married to Ko-Ko. Ko-Ko enters, preceded by a chorus of nobles, and Pooh-Bah refers Nanki-Poo to him for any further information concerning Yum-Yum. This is Ko-Ko's first public appearance as Lord High Executioner, and after thanking the nobles for their welcome, he promises strict attention to his duties. Happily, he remarks, "there will be no difficulty in finding plenty of people whose loss will be a distinct gain to society at large." He proceeds to mention in a song that he's got "a little list" of possible victims and "they'll none of 'em be missed."

So far the opera has been an exclusively masculine affair, but Yum-Yum now arrives escorted by a bevy of dainty schoolfellows, who sing of their "Wondering what the world can be." This little chorus contains two exquisite verses—

"Is it but a world of trouble
Sadness set to song?
Is its beauty but a bubble,
Bound to break ere long?"
"Are its palaces and pleasures
Fantasies that fade?
And the glory of its treasures
Shadows of a shade?"

Yum-Yum and her bridesmaids, Peep-bo and Pitti Sing, introduce themselves by the delicious trio, "Three Little Maids." Ko-Ko and Pooh-Bah enter, and Yum-Yum reluctantly permits Ko-Ko to kiss her. At this moment, Nanki-Poo arrives and the "three little maids" rush over to him and welcome him with great effusion. Ko-Ko's jealousy is aroused, and he asks to be presented. Right boyishly Nanki-Poo blurts out to Ko-Ko that he loves Yum-Yum. He expects Ko-Ko to be angry, but instead Ko-Ko thanks him for agreeing with him as to the lady's charms. Presently Nanki-Poo and Yum-Yum manage to get the Courtyard to themselves. During their tête-a-tête Nanki-Poo reveals his secret to Yum-Yum. They are interrupted by the appearance of Ko-Ko and escape in different directions. As Ko-Ko soliloquises upon his beloved, he is interrupted by Pooh-Bah with a letter from the Mikado. This is an intimation that, as no executions have taken place in Titipu for a year, the office of Lord High Executioner will be abolished and the city reduced to the rank of a village unless somebody is beheaded within one month. As this would involve the city in ruin, Ko-Ko declares that he will have to execute someone. Pooh-Bah, pointing out that Ko-Ko himself is under sentence of death, suggests that he should execute himself. This leads to an acrimonious discussion, which is ended by Ko-Ko appointing Pooh-Bah, who is already holding all the other high offices of State, to be Lord High Substitute (for himself as a victim of the headsman). But Pooh-Bah declares "I must set bounds to my insatiable ambition." He draws the line at his own death.

Whilst Ko-Ko is lamenting the position as "simply appalling" he is disturbed by the entrance of Nanki-Poo with a rope in his hands. He has made up his mind to commit suicide because Ko-Ko is going to marry Yum-Yum. Finding "threats, entreaties, prayers all useless" Ko-Ko is struck with a brilliant idea. He suggests that Nanki-Poo should at the end of a month's time "be beheaded handsomely at the hands of the Public Executioner." To this Nanki-Poo agrees on condition that Ko-Ko permits him to marry Yum-Yum. Reluctantly Ko-Ko accepts the condition, and when Pooh-Bah returns to enquire what Ko-Ko has decided to do in regard to an execution, he replies, "Congratulate me! I've found a volunteer." Whilst the townsfolk of Titipu are bantering Nanki-Poo on the prospect of marriage and death, their revelry is interrupted by the arrival of the lady who was the cause of Nanki-Poo's wandering. Katisha discovers Nanki-Poo and calls upon him to "give me my place." When he refuses she would have revealed his identity, but every time she tries to say "He is the son of your Mikado" her voice is drowned by the singing of Nanki-Poo, Yum-Yum and the chorus. Eventually Katisha rushes away threatening furious vengeance.

When the curtain rises again the scene is the garden of Ko-Ko's palace. We see Yum-Yum decked by her bridesmaids for the wedding, while they sing of her loveliness, and Pitti-Sing bids her "Sit with downcast eye; let it brim with dew." Pitti-Sing tells her also that "modesty at marriage tide well becomes a pretty bride," but this admonition seems lost upon a bride who, when her adornment is complete, frankly revels in her beauty. In "The Sun whose rays," a song of entrancing melody, she declares, "I mean to rule the earth as he the sky."

But her rapture is marred by the reminder from Peep-Bo that her bridegroom has only a month to live. Nanki-Poo finds her in tears, and has much difficulty in comforting her, their feelings being aptly expressed in that wonderful madrigal, which although it begins so joyfully with "Brightly dawns our wedding day," yet ends in tears. Ko-Ko now joins the wedding party, and although the sight of Yum-Yum in Nanki-Poo's arms is "simple torture," he insists on remaining so that he may get used to it. When Yum-Yum says it is only for a month, he tells of his discovery that when a married man is beheaded his wife must be buried alive. Naturally, Yum-Yum demurs to a wedding with such a hideous ending to the honeymoon, and Nanki-Poo declares that, as he cannot live without Yum-Yum, he intends to perform the "happy dispatch." Ko-Ko's protest is followed by the entry of Pooh-Bah to announce the approach of the Mikado and his suite. They will arrive in ten minutes. Ko-Ko, believing that the Mikado is coming to see whether his orders regarding an execution have been obeyed, is in great alarm. Nanki-Poo invites Ko-Ko to behead him at once, and Pooh-Bah agitatedly urges Ko-Ko to "chop it off," but he declares that he can't do it. He has "never even killed a blue-bottle." Ko-Ko decides that the making of an affidavit that Nanki-Poo has been executed, witnessed by Pooh-Bah in each of his capacities as Lord Chief Justice, etc., etc., will satisfy the Mikado. Pooh-Bah agrees on condition that he shall be "grossly insulted" with "cash down."

Then as Commissionaire Pooh-Bah is ordered to find Yum-Yum, Ko-Ko orders her to go along with the Archbishop (Pooh-Bah), who will marry her to Nanki-Poo at once. Waving aside all questions, Ko-Ko urges them off just as the procession heralding the Mikado and Katisha enters the garden to the strains of "Miya sama, miya sama." The Mikado extols himself as "a true philanthropist" and declares "my object all sublime, I shall achieve in time; to let the punishment fit the crime." His list of social crimes and the penalties prescribed for each class of offender are equally amusing. Ko-Ko, Pooh-Bah and Pitti-Sing now kneel in the presence, and Ko-Ko informs the Mikado that "the execution has taken place" and hands in the coroner's certificate signed by Pooh-Bah. Then the three proceed to describe an event which had happened only in their imaginations.

The Mikado seems bored, and explains that though all this is very interesting, he has come about a totally different matter. He asks for his son, who is masquerading in Titipu under the name of Nanki-Poo. Ko-Ko and his associates are visibly disturbed, but he stammers out that Nanki-Poo has gone abroad. The Mikado demands his address. "Knightsbridge" is the reply. (At the time this opera was originally produced there was a Japanese colony in Knightsbridge.) Just then Katisha, reading the coroner's certificate, discovers that it contains the name of Nanki-Poo and shrieks her dismay. Pooh-Bah, Ko-Ko, and Pitti-Sing grovel at the Mikado's feet, and apologise abjectly. The Mikado urges them not to distress themselves, and just as they are feeling that it doesn't really matter, the Mikado turns to Katisha with "I forget the punishment for compassing the death of the heir-apparent." The three culprits learn with horror that it is "something humorous, but lingering, with either boiling oil or molten lead in it." The Mikado appoints "after luncheon" for the punishment which "fits their crime."