Algernon has invited his friend Ernest over for tea. Ernest wishes to propose to Algernon’s cousin Gwendolyn. Algernon is suspicious of Ernest over his cigarette case, inscribed to an “Uncle Jack.” Ernest admits that his name is actually Jack and he goes by his fictitious brother’s, “Ernest,” when in the city; the cigarette case being a gift to him from his young country ward, Cecily. Algernon himself has created a fictitious friend “Mr. Bunbury” for when he wants to visit the country.

Gwendolyn and her harsh mother Lady Bracknell arrive. Jack proposes to Gwendolyn, who accepts, saying she could only love a man named "Ernest." Lady Bracknell refuses their betrothal, after learning that Jack was adopted after being left in a handbag in Victoria Station as a baby and has no direct relations. Gwendolyn is still in love with Jack, who gives her a note with his address in the country. Algernon secretly reads it.

Cecily studies with her governess, Miss Prism, on Jack’s estate. Algernon arrives, pretending to be his brother Ernest. Cecily falls in love with him and they become engaged. Coincidentally, she too can only love a man named “Ernest.”

Meanwhile Jack wants to kill off Ernest, shedding his alter ego. He can’t do that with Algernon there. They decide to both be rechristened as “Ernest.” When Gwendolyn arrives, she meets young Cecily, and they discover they are both engaged to men named “Ernest.”

Lady Bracknell arrives at the estate, looking for her daughter. She learns of Algernon’s proposal to Cecily and is enthused when she learns of Cecily’s trust fund. Miss Prism enters and is immediately recognized by Lady Bracknell. Prism was the family maid who was taking care of her nephew who mysteriously vanished. In the end, it is revealed that Algernon and Ernest are actually brothers and that Ernest is actually of good stock. In fact, young baby Jack was to be named after his father General Ernest Moncreiff.