Having been granted a private conference with the Duke of Milan, Proteus informs him of Valentine’s hidden affection for his daughter Silvia and of Valentine’s intention to elope with her. When the Duke assures Proteus that he has always suspected Valentine of harboring feelings for Silvia and that he has taken precautions to prevent them from eloping, Proteus informs the Duke that Valentine has hatched a plan that will circumvent the Duke’s precautions. Before leaving, Proteus urges the Duke that when he intercepts Valentine in the act of eloping with his daughter that he omit any mention of Proteus’ role in the matter as he—Proteus—is tattling on his friend at a great expense to his conscience. Presently, the Duke accosts Valentine and confides him in a very private matter. Citing his disillusionment with Silvia whose refusal to marry Sir Thurio has the Duke contemplating of letting his daughter marry whomever she pleases (though without a dowry), the Duke describes his plan to deal with the subsequent loneliness, i.e. to get himself married. The problem is that the woman whom he has taken a fancy to is oblivious to his advances to the extent that she has sequestered herself in an inaccessible building. When Valentine tells the Duke that the building may be accessed with an anchored cord which the Duke may secretly convey beneath his cloak, the Duke, taking note of Valentine’s cloak, asks Valentine to lend him his. Valentine objects but to no avail. Beneath Valentine’s cloak, Duke discovers a letter, which describes Valentine’s intention to elope with Silvia, not to mention a hidden anchored cord, with which Valentine intends to gain access to the tower wherein the Duke nightly confines Silvia. Reproaching Valentine for his betrayal, the Duke exiles Valentine from Milan. Alone, Valentine reflects on his impossible situation. If he stays in Milan, he will forfeit his life, but isn’t that preferable to a living death which will be the state of his life should he live without Silvia’s presence to give it meaning?
Meanwhile, Proteus orders his servant Launce to make haste and find Valentine when Valentine, who is in a state of trauma, appears of his own accord. Despite Valentine’s despondency, Proteus informs Valentine of the terrible news concerning him and offers advice on how make the best of the situation: Leave Milan at once and live to love another day; Proteus will act as liaison between Valentine and Silvia during Valentine’s exile. Commissioning Launce to go fetch his servant Speed, Valentine allows himself to be led by Proteus. Alone, Launce congratulates himself for having fallen in love and yet having it kept a secret from his master Proteus. Presently, Launce reads that which is good as a love letter as far as he’s concerned (it’s a list of his beloved’s qualities both good and bad) when Valentine’s servant Speed comes upon him and inquires about the content of Launce’s letter. Launce refuses to let Speed read his letter, arguing that Speed is illiterate so why bother. When Speed insists that he can read, Launce obliges Speed. Speed begins to read the letter which for all intents and purposes is an extensive list of random qualities of a random woman. Speed is at a loss only to be told by Launce that his master Valentine is expecting him at the North-gate, and that Speed will most likely incur his master’s displeasure on account of his—Speed’s –tardiness. Angry at Launce for not telling him sooner, Speed goes to meet his master. Meanwhile, Launce, attributing Speed’s nosiness for getting himself into trouble, follows on Speed’s heels, eager to see Speed get a good beating at his master’s hands.
When Sir Thurio complains that Valentine’s exile has only intensified Silvia’s ardor for Valentine, the Duke of Milan assures Thurio that Silvia will eventually come around and fall in love him. Still, the Duke feels compelled to confide in Proteus who offers the following solution: Employ someone credible, like a friend of Valentine, to defame Valentine’s character and Silvia will believe and her love for Valentine fade. At the Duke’s insistence, Proteus agrees to undertake the task. Indeed, Proteus is so committed that he points out the unlikelihood of Silvia falling in love with Thurio even if she ceases to love Valentine. Consequently, Thurio urges Proteus to speak glowingly of him—Thurio—while he is casting aspersions on Valentine. Proteus argues, however, that Thurio hasn’t done enough on his part to warrant a woman’s love. He urges Thurio to write a love sonnet and having it set to music to serenade Silvia. Arguing that Proteus knows what he’s talking about (on account of his love for Julia), the Duke urges Thurio to take Proteus’ advice to heart. Thurio resolves to do so. The Duke urges them to put their design to practice without any delay.