In his palace in Camelot Arthur learns from Merlyn the wisdom of peace and brotherhood, and thus is inspired to establish the Round Table. The news of this reaches young Lancelot in France, who is determined to come to Camelot and join Arthur's knights ("C'est Moi"). After he arrives, a gala outing takes place on the castle grounds ("The Lusty Month of May"), where Arthur introduces his wife to Lancelot. Guenevere takes an instant dislike to this cocky young fellow and instigates him to engage three knights of the Round Table in a jousting match ("Then You May Take Me to the Fair"). In vain does Arthur try to dissuade Guenevere from taking sides against Lancelot, and failing to do so, is completely at a loss to understand a woman's way ("How to Handle a Woman").

In the jousting match Lancelot handily defeats all three knights, to the amazement of his onlookers, and to the growing admiration of Guenevere. Lancelot meanwhile has fallen in love with the Queen. Torn by inner conflict between this love and his devotion to Arthur, he asks permission to leave Camelot for foreign conquests. He comes back to Camelot two years later, and in an impressive ceremony Arthur now makes him a Knight of the Round Table. Arthur is not unaware that Lancelot is still in love with Guenevere, nor has he failed to notice that by now his queen is strongly attracted to the young, handsome knight. Yet he must remain silent, for not to do so would be to disturb the tranquility of Camelot. Meanwhile, Lancelot reveals to Guenevere his tender feelings for her ("If Ever I Would Leave You"). Guenevere is responsive. Nevertheless, she remains faithful to Arthur, and is his helpmate in carrying on the affairs of State ("What Do Simple Folks Do").

Mordred, Arthur's illegitimate son, now comes to Camelot to dishonour the King and thus gain the throne for himself. He prevails on his sorceress-aunt, Morgan le Fey, to trap Arthur in a forest one night. While Arthur is gone, Lancelot visits Guenevere in her chambers, where she breaks down and tells Lancelot how much she loves him ("I Loved You Once in Silence"). Mordred bursts into the room with some of the Knights of the Round Table to accuse Lancelot of treachery and to imprison him. Lancelot succeeds in escaping from prison, but Guenevere is sentenced to burn. At the zero hour, however, she is saved by Lancelot, who takes her off with him to France.

For the sake of his own honour and that of Camelot, Arthur must now wage war on France. Just before the final battle he meets Lancelot and Guenevere, and forgives them both. But the war must go on. In camp, Arthur meets a young stowaway who wants to join the Round Table. Arthur knights him on the field of battle and sends him back to England to grow up there and carry on for another generation the ideals of Camelot.