The Fairy Queen banishes Iolanthe because Iolanthe marries a mortal. Normally the punishment for such an act is death, but the queen so loves Iolanthe that she is unable to enforce the penalty. Iolanthe is sentenced to penal servitude for life, on the condition that she never see her mortal husband again. The other fairies beg the queen to relent, to set aside this punishment. Iolanthe serves twenty-five years of her sentence standing on her head at the bottom of a stream.
The queen, unable to resist their pleas, summons the penitent Iolanthe and pardons her. Iolanthe explains that she stayed in the stream to be near her son Strephon, an Arcadian shepherd who is a fairy to his waist and a human from the waist down. While they speak, Strephon enters, announcing that he is to be married that day to Phyllis, a ward of Chancery. The Lord Chancellor does not give his permission, but Strephon is determined to marry his Phyllis anyway. He is delighted when he learns that his mother is pardoned, but he begs her and all the fairies not to tell Phyllis that he is half fairy. He fears that she will not understand.
The queen determines to make Strephon a member of Parliament, but Strephon says that he will be no good in that August body, for the top of him is a Tory, the bottom a Radical. The queen solves that problem by making him a Liberal-Unionist and taking his mortal legs under her particular care. Phyllis talks with Strephon and warns him that to marry her without the Lord Chancellor’s permission will mean lifelong penal servitude for him. Strephon cannot wait the two years until she is of age. He fears that the Lord Chancellor himself or one of the peers of the House of Lords will marry her before that time passes.
Strephon’s fears are well founded; the Lord Chancellor does want to marry his ward. Fearing that he will have to punish himself for marrying her without his permission, however, he decides to give her instead to one of the peers of the House of Lords. Two are at last selected, the Earl of Mountararat and Earl Tolloller, but there is no agreement as to the final choice. Phyllis does not wish to accept either, since she loves only Strephon. Then she sees Strephon talking with Iolanthe, who, being immortal, looks like a young and beautiful woman, although she is Strephon’s mother. Phyllis is filled with jealousy, augmented by the laughter of the peers when Strephon, in desperation, confesses that Iolanthe is his mother. Weeping that he has betrayed her, Phyllis leaves Strephon. No one ever heard of a son who looks older than his mother.
The Fairy Queen tells the Lord Chancellor and the peers that they will rue their laughter over Iolanthe and her son. To punish them, Strephon will change all existing laws in the House of Lords. He will abolish the rights of peers and give titles to worthy commoners. Worst of all, from then on peers will be chosen by competitive examinations. Strephon will be a foe they will not soon forget.
The queen’s prediction comes true. Strephon completely rules the House of Lords. Every bill he proposes passes, the fairies making the other members vote for Strephon even when they want to vote against him. The peers appeal to the fairies, but although the fairies admire the peers, the fairies cannot be swayed against Strephon. The Earl of Mountararat and Earl Tolloller try to decide who should have Phyllis. Each wants the other to sacrifice himself by giving up all rights to her. Both have a family tradition that they must fight anyone who takes their sweethearts, and since a fight means that one of them will die and the survivor will be left without his friend, each wants to make the sacrifice of losing his friend. At last the two decide that friendship is more important than love. Both renounce Phyllis.
Strephon and Phyllis meet again, and at last he convinces her that Iolanthe is really his mother. Phyllis still cannot believe that Strephon looks like a fairy, and she cannot quite understand that his grandmother and all his aunts look as young as his mother. She is sensible, however, and promises that whenever she sees Strephon kissing a very young woman she will know the woman is an elderly relative. There is still the Lord Chancellor to contend with. When they go to Iolanthe and beg her to persuade him to consent to their marriage, Iolanthe tells them that the Lord Chancellor is her mortal husband. He believes her dead and himself childless, and if she looks on him the queen will carry out the penalty of instant death.
Iolanthe cannot resist the pleas of the young lovers. As she tells the Lord Chancellor that she is his lost wife, the queen enters and prepares to carry out the sentence of death against Iolanthe. Before she can act, however, the other fairies enter and confess that they, too, married peers in the House of Lords. The queen grieves, but the law is clear. Whoever marries a mortal must die. The Lord Chancellor’s great knowledge of the law saves the day. The law will now read that whoever does not marry a mortal must die. Thinking that a wonderful solution, the queen takes one of the palace guards, Private Willis, for her husband. Knowing that from now on the House of Lords will be recruited from persons of intelligence, because of Strephon’s law, the current peers can see that they are of little use. Sprouting wings, they all fly away to Fairyland.