Bassanio needs money to woo the wealthy Portia. He asks his friend Antonio, a wealthy merchant, for a loan. Antonio's money is tied up in merchant ships carrying back goods from different parts of the globe. Antonio has no money to spare, but because he loves Bassanio very deeply he takes a loan for his friend, from Shylock.
Shylock is a Jew. They were the moneylenders in Venice, as Christians were not able to charge interest on loans. Antonio had insulted Shylock in the past for being Jewish, so Shylock wanted revenge. He loans Antonio the money, but he insists on a pound of Antonio's flesh, taken from any part of his body Shylock chooses, if the money is not repaid on time.
As is declared in her father's will, Portia is not able to choose her husband. Instead, she must marry the man who picks the right one of three caskets, one gold, one silver and one lead. Several suitors select the wrong casket. Bassanio chooses the right one, made of lead. He also falls in love with Portia, although he initially wished to marry her for her money.
Meanwhile, all of Antonio's ships appear to be lost. Shylock then insists on his pound of flesh. He wants it from Antonio's heart, which means Antonio will die. The two go to court to plead before the Duke. There, Portia and her maid Nerissa show up, disguised as a male lawyer and his male clerk. Portia proceeds to appeal to Shylock's sense of mercy, and when that doesn't work, reverts to the letter of the law, as Shylock has done. She insists that Shylock can take Antonio's flesh but must not spill one drop of his blood or his own life will be forfeit, a sentence the Duke supports. Shylock is humiliated and defeated, and is sentenced to give up half his fortune, and to convert to Christianity.
After the trial, the disguised Portia and Nerissa insist that their fiances give them rings that they had promised never, ever to part with under any circumstances. They had given them, however, to the "male lawyer and clerk" as repayment for the positive outcome of the trial. Later, they tease their beloveds about this, but all works out harmoniously in the end, especially as three of Antonio's ships arrive at port after all.