The drama opens with the play’s main character, Prince Gongsun Yu of Tingan in fierce combat with Prince Ch’ou Jong of Northern Yan. Gongsun Yu heard tragic news of his father’s fall from a horse. He leaves the battlefield and hastens back to the palace in the capital.

When he arrives, he discovers that his uncle has both married the Queen, his mother, and has ascended the throne. Full of sorrow and pain, Gongsun is comforted by his tender young lover, Hsiao Hsiang. But Hsiao Hsiang’s father, Chancellor Hsiao, turns up unexpectedly at the scene and stops the two lovers. This harsh attitude of the chancellor makes Gongsun suspicious, and while in this mood, his friend Huo Hsugang comes to tell him about strange appearances near the city walls. Shortly after hearing this news, the ghost of the late king appears to Gongsun and informs him of the mean plot of his mother and uncle to murder him. Totally shocked, Gongsun loses consciousness. Shortly after, the prince’s behavior becomes strange and everyone around him thinks he has gone insane. His uncle tries to show concern by inviting a theatre troupe to entertain Gongsun. Gongsun decides to use this opportunity to point out all the wrongdoings of his uncle in public, by asking the actors to perform a play. His plan is successful and the king leaves the play enraged.

Full of hatred, the king plans to send the Prince on holiday to a neighboring state, using his mental illness as a premise.

Meanwhile, the chancellor hears that the Prince and the Queen have secretly arranged a meeting, and may eventually make a stand against the king, so he enters the palace to eavesdrop on them. In the palace, the Prince and Queen are bitterly arguing, when suddenly the ghost of Gongsun’s father appears and pleads with him to take revenge as soon as he can. Gongsun takes up a sword, and the Queen thinks he is going crazy again because she cannot see or hear the ghost. She cries out in fear of her life, but the Prince ignores her since he has noticed someone lurking behind a curtain and thinks it can only be his uncle. He stabs the man to death, only to realize then that it is the chancellor instead.

In the meantime, Prince Ch’ou Jong has turned up at the borders again, and Hsiao Yi (Hsiao Hsiang’s brother and the chancellor’s son) is called on to oppose him. When he hears about his father’s death, he rushes back to the capital, giving Prince Ch’ou the chance to prepare a full-scale invasion of Tingan.

Gongsun Yu is exiled from Tingan, and the king hires two assassins to follow and murder him. Meanwhile Hsiao Hsang is in great despair, as her lover has gone insane and has been exiled, and her father has been brutally murdered. She goes to the “Hundred Flower Lake” to mourn her situation. She compares the purity of life with the waterlilies she sees there. The King and Queen come to look for her and tell her of her brother’s plans to avenge his father’s death. This distresses Hsiao Hsiang, and she wanders away, the Queen following her.

A letter arrives for the King from Gongsun Yu, mocking the failed assassination and vowing to take revenge.

The King plans to save himself by arranging a duel between Hsiao Yi and Gongsun Yu. As he is planning this, the Queen suddenly appears to tell him that Hsiao Hsang has fallen into the lake and is already dead.

As Gongsun is returning to the capital, he comes across a gravedigger working in a graveyard. He finds out that he is digging Hsiao Hsiang’s grave, and breaks down at the graveside and cries bitterly.