Shortly after Bassanio solves the riddle of the caskets to win Portia's hand in marriage and Gratiano confesses his love for Nerissa, Salerio arrives and gives Bassanio a letter from Antonio. Upon reading Antonio's letter, Bassanio's face grows pale, and Portia begs him to share what he has read. Bassanio responds by confessing that he is not the wealthy gentleman he appears to be and explains that his close friend Antonio loaned him the money to make the trip to Belmont. Bassanio also explains that Antonio is involved with his "mere enemy" and currently in grave danger because his merchant ships are lost at sea.

After Bassanio elaborates on Shylock's bond, he reads Antonio's letter aloud, which states that all his ships have miscarried and his creditor grows cruel. Antonio also writes that his estate is very low and he will certainly forfeit his bond with Shylock. Antonio also tells Bassanio that all their debts are cleared between them if he can see him before he dies and hopes that his letter will persuade him to return home. Bassanio is disturbed by the terrible news and immediately returns home. Portia sympathizes with her husband's difficult situation and begins plotting a way to save Antonio's life.