Act 1

Isolde, promised to King Marke in marriage, and her handmaid, Brangäne, are quartered aboard Tristan's ship being transported to the king's lands in Cornwall. The opera opens with the voice of a young sailor singing of a "wild Irish maid", ("Westwärts schweift der Blick") which Isolde construes to be a mocking reference to herself. In a furious outburst, she wishes the seas to rise up and sink the ship, killing herself and all on board ("Erwache mir wieder, kühne Gewalt"). Her scorn and rage are directed particularly at Tristan, the knight responsible for taking her to Marke, and Isolde sends Brangäne to command Tristan to appear before her ("Befehlen liess' dem Eigenholde"). Tristan, however, refuses Brangäne's request, claiming that his place is at the helm. His henchman, Kurwenal, answers more brusquely, saying that Isolde is in no position to command Tristan and reminds Brangäne that Isolde's previous fiancé, Morold, was killed by Tristan ("Herr Morold zog zu Meere her").

Brangäne returns to Isolde to relate these events, and Isolde, in what is termed the "narrative and curse", sadly tells her of how, following the death of Morold, she happened upon a stranger who called himself Tantris. Tantris was found mortally wounded in a barge ("von einem Kahn, der klein und arm") and Isolde used her healing powers to restore him to health. She discovered during Tantris' recovery, however, that he was actually Tristan, the murderer of her fiancé. Isolde attempted to kill the man with his own sword as he lay helpless before her. However, Tristan looked not at the sword that would kill him or the hand that wielded the sword, but into her eyes ("Er sah' mir in die Augen"). His action pierced her heart and she was unable to slay him. Tristan was allowed to leave with the promise never to come back, but he later returned with the intention of marrying Isolde to his uncle, King Marke. Isolde, furious at Tristan's betrayal, insists that he drink atonement to her, and from her medicine chest produces a vial to make the drink. Brangäne is shocked to see that it is a lethal poison.

Kurwenal appears in the women's quarters ("Auf auf! Ihr Frauen!") and announces that the voyage is coming to an end. Isolde warns Kurwenal that she will not appear before the King if Tristan does not come before her as she had previously ordered and drink atonement to her. When Tristan arrives, Isolde reproaches him about his conduct and tells him that he owes her his life and how his actions have undermined her honour, since she blessed Morold's weapons before battle and therefore she swore revenge. Tristan first offers his sword but Isolde refuses; they must drink atonement. Brangäne brings in the potion that will seal their pardon; Tristan knows that it may kill him, since he knows Isolde's magic powers ("Wohl kenn' ich Irland's Königin"). The journey almost at its end, Tristan drinks and Isolde takes half the potion for herself. The potion seems to work but it does not bring death but relentless love ("Tristan!" "Isolde!"). Kurwenal, who announces the imminent arrival on board of King Marke, interrupts their rapture. Isolde asks Brangäne which potion she prepared and Brangäne replies, as the sailors hail the arrival of King Marke, that it was not poison, but rather a love potion.

Act 2

King Marke leads a hunting party out into the night, leaving Isolde and Brangäne alone in the castle, who both stand beside a burning brazier. Isolde, listening to the hunting horns, believes several times that the hunting party is far enough away to warrant the extinguishing of the brazier – the prearranged signal for Tristan to join her ("Nicht Hörnerschall tönt so hold"). Brangäne warns Isolde that Melot, one of King Marke's knights, has seen the amorous looks exchanged between Tristan and Isolde and suspects their passion ("Ein Einz'ger war's, ich achtet' es wohl"). Isolde, however, believes Melot to be Tristan's most loyal friend, and, in a frenzy of desire, extinguishes the flames. Brangäne retires to the ramparts to keep watch as Tristan arrives.

The lovers, at last alone and freed from the constraints of courtly life, declare their passion for each other. Tristan decries the realm of daylight which is false, unreal, and keeps them apart. It is only in night, he claims, that they can truly be together and only in the long night of death can they be eternally united ("O sink' hernieder, Nacht der Liebe"). During their long tryst, Brangäne calls a warning several times that the night is ending ("Einsam wachend in der Nacht"), but her cries fall upon deaf ears. The day breaks in on the lovers as Melot leads King Marke and his men to find Tristan and Isolde in each other's arms. Marke is heartbroken, not only because of his nephew's betrayal but also because Melot chose to betray his friend Tristan to Marke and because of Isolde's betrayal as well ("Mir – dies? Dies, Tristan – mir?").

When questioned, Tristan says he cannot answer to the King the reason of his betrayal since he would not understand. He turns to Isolde, who agrees to follow him again into the realm of night. Tristan announces that Melot has fallen in love with Isolde too. Melot and Tristan fight, but, at the crucial moment, Tristan throws his sword aside and allows Melot to severely wound him.

Act 3

Kurwenal has brought Tristan home to his castle at Kareol in Brittany. A shepherd pipes a mournful tune and asks if Tristan is awake. Kurwenal replies that only Isolde's arrival can save Tristan, and the shepherd offers to keep watch and claims that he will pipe a joyful tune to mark the arrival of any ship. Tristan awakes ("Die alte Weise – was weckt sie mich?") and laments his fate – to be, once again, in the false realm of daylight, once more driven by unceasing unquenchable yearning ("Wo ich erwacht' weilt ich nicht"). Tristan's sorrow ends when Kurwenal tells him that Isolde is on her way. Tristan, overjoyed, asks if her ship is in sight, but only a sorrowful tune from the shepherd's pipe is heard.

Tristan relapses and recalls that the shepherd's mournful tune is the same as was played when he was told of the deaths of his father and mother ("Muss ich dich so versteh'n, du alte, ernst Weise"). He rails once again against his desires and against the fateful love potion ("verflucht sei, furchtbarer Trank!") until, exhausted, he collapses in delirium. After his collapse, the shepherd is heard piping the arrival of Isolde's ship, and, as Kurwenal rushes to meet her, Tristan tears the bandages from his wounds in his excitement ("Hahei! Mein Blut, lustig nun fliesse!"). As Isolde arrives at his side, Tristan dies with her name on his lips.

Isolde collapses beside her deceased lover just as the appearance of another ship is announced. Kurwenal spies Melot, Marke and Brangäne arriving ("Tod und Hölle! Alles zur Hand!"). He believes they have come to kill Tristan and, in an attempt to avenge him, furiously attacks Melot. Marke tries to stop the fight to no avail. Both Melot and Kurwenal are killed in the fight. Marke and Brangäne finally reach Tristan and Isolde. Marke, grieving over the body of his "truest friend" ("Tot denn alles!"), explains that Brangäne revealed the secret of the love potion and that he had come not to part the lovers, but to unite them ("Warum Isolde, warum mir das?"). Isolde appears to wake at this and in a final aria describing her vision of Tristan risen again (the "Liebestod", "love death"), dies ("Mild und leise wie er lächelt").