In the throne room, King Basilio is conferring with Clotaldo and one of his courtiers. The courtier tells them that Prince Segismund seems to have recovered from the effects of the sleeping potion but remains dazed and confused by his new surroundings. The king says that when Segismund is somewhat more used to being treated as a prince, then Clotaldo, and finally the king himself, will visit him. They leave the throne room, whereupon Segismund rushes in, clearly irritated by the attentions of the servants and courtiers. He is disoriented by the grandeur of the palace and particularly by the number of mirrors it contains. In these mirrors, he sees both himself and the courtiers’ constant attention to him.

Segismund sits down on the throne, whereupon a chamberlain appears, congratulating him for taking his rightful place as the king’s heir. Segismund questions the chamberlain about his position and about his relations with Clotaldo, the only one of the courtiers he has regularly seen during his imprisonment. Clotaldo enters and also greets Segismund as a prince, assuring him that he will explain what is happening. He swears that Segismund really is the prince of Poland, that this is his palace, and that all those he sees around him are his subjects.

Segismund accepts Clotaldo’s assurance that he is the prince but demands to know why he has been imprisoned far away from the court until now. He believes that either Clotaldo or his father must have behaved treacherously toward him and seizes Clotaldo’s sword in order to attack him. At this moment, Rosaura enters and rebukes Segismund for fighting an old man, then retreats quickly into the crowd. Astolfo is right behind her and greets the prince in fulsome terms. Segismund reluctantly returns his greeting but remains preoccupied with Rosaura and where she has gone.

Princess Estrella enters the throne room with her ladies in waiting. Segismund receives her warmly, in stark contrast to his disdain for Astolfo. He embraces her, and Estrella demands that he let her go. Astolfo, who hopes to marry Estrella, makes the same demand, and Segismund refuses contemptuously, then seizes Astolfo by the throat. King Basilio enters and is distressed to witness the altercation, which seems to confirm his initial fears about Segismund.

Segismund looks at the king and has no sense of filial affection. However, he says that he has not seen Basilio for twenty years, throughout the course of his imprisonment, so it is scarcely surprising that he fails to recognize him. He complains that his father has failed to treat him like a human being, let alone a prince, and Basilio admits that this must seem to be the case from his perspective but defends himself by saying that he followed the commands he saw written in the stars.

Basilio and Segismund argue about Basilio’s decision. Segismund argues that, by imprisoning his son and treating him as a wild beast, Basilio is likely to have fulfilled the prophecy he claims to have discerned in the stars. He asks why his father did not simply kill him immediately, rather than subjecting him to this ordeal. Basilio replies that he hoped Segismund would learn to live in such a way as to overcome the prophecy. He says that the rationality and intelligence with which Segismund is now arguing prove that he was right. He will be delighted if his son proves to be a worthy king, and will give up his own power willingly to Segismund.

Segismund contemptuously replies that the king has only thought of these arguments now that he is old and urgently needs an heir. He tells the king that he will not be imprisoned so easily again and that he will be revenged for the wrongs Basilio has done him. Basilio advises him to be careful and subdue his temper. Perhaps his new situation will melt away like a dream, and he will be returned to his former wretched state.

A trumpet sounds, and soldiers file into the throne room. Segismund believes they have come to do his bidding and arrest Basilio, but they arrest him instead.