This play is set in Creole Louisiana, before the Civil War, on a plantation called Terrebonne. The owner, Mr. Peyton, has died and left a mountain of debts and liens against the property, and this is making it problematic for his wife and daughter. He has no children with his wife, but he has one daughter, a young woman named Zoe, who is one-eighth black—the “octoroon” of the play’s title—and who he fathered with a slave (who must have been a “quadroon,” a person with one-quarter black heritage).

George Peyton, the owner’s nephew, has come to assist the widow Peyton with her business. A planter named Salem Scudder was brought in a while ago to help out with the running of the place, but he apparently sank a bunch of money into crazy inventions that didn’t work out. Another man called M’Closky went through the courts and “away went a thousand acres” of Terrebonne to him. Between his “knavery” (according to Scudder) and Scudder’s own “folly,” the rest of the plantation is likely to be sold off to cover debts.

Mr. Peyton believed that he had freed his daughter, Zoe, but because he had already incurred a lien on the property, she wasn’t his property to free. M’Closky, who everyone agrees is awful, falls in love with her, as does George, and Scudder is already in love with her. Dora Sunnyside, the daughter of another local planter, falls in love with George. George reveals his love to Zoe, who loves him too, and the fact that she is the daughter of a slave does not deter him. He almost proposes to Dora to get her fortune and save Terrebonne, but he cannot bring himself to lie. She, however, gets her father to buy the plantation in order to save it, George, and Zoe, but Zoe is sold off separately to M’Closky after a huge bidding war between him and the Sunnysides.

M’Closky, meanwhile, has killed a young slave named Paul, and he tries to frame an Indian named Wahnotee for the murder. Paul was carrying bags of mail, and M’Closky wanted to intercept the mail to prevent notice of a loan repayment to Mrs. Peyton (that might save the plantation). Paul was beloved and also valuable, and so the whites want to find what has happened to him. Just as the men circle Wahnotee, getting ready to lynch him, Scudder finds that a nearby camera (which Wahnotee had broken, believing that it was a gun that killed Paul) took a picture of Paul and M’Closky just as the latter was using a tomahawk to kill the former. M’Closky escapes while being taken to justice but is confronted and killed by Wahnotee.