Alberich, who lives underground, tries to catch the three Rhine Daughters in their river. They tease him, and he fails to catch them. Alberich learns that they are guarding magic gold that can be made into a ring to rule the world. But, the Rhine Daughters tell him, only someone willing to give up all hope of love can use this power. Alberich steals the gold and renounces all hope of love to forge his ring.
The gods have asked the giants Fasolt and Fafner to build them a castle high above the earth. Wotan, the king of the gods, pledged Freia, the goddess of love to the giant brothers in payment for his new castle. When he denies his promise, the giants take the goddess away. All the gods, who live off Freia’s apples of youth, now grow old and are desperate to bring Freia back. Wotan seeks for another way to pay off the giants and regain the goddess. When Loge, the god of trickery, arrives to announce Alberich’s theft of the gold from the Rhine Daughters, the giants agree to give up Freia in exchange for Alberich’s treasure.
Wotan and Loge descend to the realm of the Nibelungs and capture Alberich. To win his freedom, Alberich agrees to give his gold to the gods. Wotan rips the ring off Alberich’s finger and adds it to the treasure. Alberich then curses the ring to bring death and destruction to all who possess it.
The giants give up the goddess of love for Alberich’s gold. The brothers fight among themselves for the ring. Fasolt dies, and the gods realize that Alberich’s curse works. Fafner leaves with the ring. The gods proceed across the rainbow bridge to Valhalla, their new home in the clouds.