Act 1
Mustafà, Bey of Algiers, has grown tired of his wife Elvira and of the bland, uninteresting women in his harem. He decides he needs the challenge of an Italian wife, for he has heard that Italian women are feisty and independent. He orders his servant Haly to find him an Italian woman within the week or be beheaded. Meanwhile, despite Elvira's continued love for him, Mustafà resolves to give her to his Italian slave, Lindoro. Lindoro is just as dismayed as Elvira, for he is in love with Isabella, a woman he left behind in Italy.
Isabella, who has left Italy to look for Lindoro, is shipwrecked on the shore of Algiers with her admirer Taddeo. Haly and his attendants seize Isabella for Mustafà's harem. Isabella is unfazed by this complication and decides that it would be safest for Taddeo to pretend to be her uncle while she thinks up a scheme to get them out of the situation.
Mustafà decides to get rid of Elvira permanently by sending her to Italy with Lindoro. Haly arrives at the palace with his captives just as the reluctant Lindoro and Elvira are preparing to leave. Haly describes Isabella to Mustafà, who is gleeful at the thought of having acquired a beautiful Italian woman. He receives Isabella and is immediately smitten; Isabella, however, can hardly restrain her laughter at the sight of this funny-looking man. When Elvira and Lindoro enter to say farewell, Isabella and Lindoro are stunned to find each other in Mustafà's court. Isabella immediately demands that Lindoro and Elvira stay, and furthermore that Lindoro be assigned to her as her personal slave. Mustafà helplessly protests, and everyone is plunged into confusion.
Act 2
In Isabella's apartment, Lindoro convinces her of his fidelity, and the two plot their escape. Meanwhile Mustafà, in the hope of ingratiating himself with Isabella, invents what he calls the noble order of Kaimakan and inducts Isabella's "Uncle" Taddeo into it. He explains that, as a Kaimakan, Taddeo will be his lieutenant, but Taddeo recognizes that his chief duty will consist of inducing Isabella to favor Mustafà. Elvira, hoping that the clever Isabella will ultimately cause Mustafà to return to her, plays along with her husband's infatuation for the time being. Isabella rebukes her for being so compliant, telling Elvira to "Do as I do." Knowing that all three of her admirers, Mustafà, Taddeo, and Lindoro, are listening, Isabella sings a love song without naming the man she loves, and the men are transfixed. Mustafà cannot resist her. "When I sneeze," he instructs Taddeo, "leave me alone with her." Taddeo refuses to budge, however. When Isabella tries to bring about a reconciliation between Mustafà and Elvira, Mustafà loses his temper and storms out, vowing vengeance on all of them.
The next scheme Isabella concocts is to induct Mustafà into the Italian equivalent of Kaimakan, which she names the noble order of "Pappataci." Lindoro explains the Pappataci duties: eating, drinking, and sleeping. The delighted Mustafà declares that he can handle all these responsibilities, and the induction ceremony begins. Lindoro and Taddeo instruct Mustafà that while he is carrying out his Pappataci duties, he is not allowed to react to anything that goes on around him. As Mustafà begins his Pappataci career by eating, Isabella and Lindoro prepare to depart for Italy. Mustafà ignores them, believing that their activities are a ploy to test his fidelity to his Pappataci vows. When it is too late to stop them, he finally realizes he has been tricked, and he returns to Elvira, acknowledging that Isabella's ingenuity has been too much for him.