Scene one: a house where a couple are to be married
In one room, a group of girls are gathered around the bride admiring her trousseau, especially the fine undergarments. The bride says that she's invited Gala, the maker of the fine underthings. All the ladies praise her handiwork. In the meantime, in another room, a group of men surround the groom. One of the men, Don Comadreja de Pantalones, is particularly loud in his sympathy for the groom. He toasts the end of the groom's happiness, expresses sorrow for the ball and chain the man is about to adopt, and then expresses his own happiness because this means more chicks for him!
Scene two: the wedding ball
Don de Pantalones spies Gala and is immediately taken with her. He assumes that since she is at the wedding of a very important gentleman, she must be a noble lady. He dances with her, telling her that she is beautiful and charming and that he would like to meet her family and ask for her hand. She finds him handsome and gallant, but is worried that if he finds out that she's just a simple seamstress, he won't love her anymore. She puts him off, but he tells her that he will woo her until the end of his days.
Scene three: a street in Madrid with a high wall
Don de Pantalones is walking along the street on his way to his club for lunch. On the other side of the wall there is a marketplace with many stalls and sellers. There is a lady selling oranges, one selling flowers, and Gala, calling to the passersby to come and see the fruits of her handiwork - her underpants. Don de Pantalones hears the woman exhorting passersby to see her underpants and is enticed. He decides that while Gala may be the woman of his future, this mysterious underpants exhibitionist is the woman of his present. He rushes into the market but the rushing throng of people serve to hide Gala from him. By the time he comes to the place where she had been, she's sold out of her finery and gone home. He becomes obsessed with this woman who will show people her underpants and vows to find her.
Scene four: Gala's house
Gala opens another of many letters from Don de Pantalones declaring his love for her. She is deeply touched and wonders when she ought to tell him that she's only a seamstress. There is to be a large costume party in a week's time, and she will tell him on the night of the party that although he is a rich and powerful man and she is only a seamstress, still her heart is pure and she loves him truly. She believes that the magic of the evening (and a particularly ravishing Bo Peep costume) will win his heart.
Scene five: the house of Don de Pantalones
Don de Pantalones employs his friend Ricardo to find the underpants exhibitionist. He tells Ricardo only that there is a woman offering herself to passersby in Calle Calzones near the marketplace. He exhorts Ricardo to find this woman and bring her to him.
Scene six: Gala's house
Unbeknownst to Don de Pantalones, Ricardo is a cousin of Gala and goes to the girl, telling her of the Don's wishes. Gala is distraught. She is humiliated and angry and decides to expose Don de Pantalones for the philandering wolf that he is. She plots with Ricardo to expose the Don at the costume party. Ricardo is to find the wanton woman and bring her to the party, and tell the Don that she is there. When the Don meets up with her, Gala will expose him to all their friends.
Scene seven: the costume ball
Gala looks ravishing as Bo Peep in a costume with a huge hoop skirt. Don de Pantalones has come separately as a sheep with a little bell around his neck. Ricardo corners Gala and tells her there is a problem - he hasn't been able to find the woman. Gala decides that the next best thing to do is to trick him into thinking that she is the loose woman. She whispers her plan to Ricardo who goes off to find Don de Pantalones.
Scene eight: the lawn
The group is gathered to play sardines. The host briefly explains the rules - one person hides and everyone looks for them. When the hider is found, the finder must squeeze into the hiding place as well. The last person to find the hider is the first to hide for the next game. And Gala is chosen as the hider! She hides herself in a potting shed while Ricardo tells Don de Pantalones that he has found the woman, and it's none other than Bo Peep! He leads the Don to the potting shed, then goes off to tell the rest of the company what a rat the Don is, and how he's wooing one woman while chasing another. Meanwhile, in the dark of the shed, the Don asks if he might see her underpants. Gala thinks that the Don has found out her secret and breaks down weeping. The Don discovers that the underpants woman is his Gala and swears to love her all the more. When Ricardo throws open the potting shed for all to see, the two are embracing and kissing and swearing eternal love. As the curtain falls, Gala intimates that if he's lucky, he just might get to see her underpants later