Many years after his second crusade to the Holy Land, Richard contemplates the beauty and majesty of Arabia as he recalls a tale once related to him in song by a wandering troubadour. It is a marvelous tale, with fantastic stories of adventure and intrigue, as told by the beautiful Scheherazade and her younger sister Dunyazade (Dune-yee-a-zad) to the king of Arabia.

As the tale recounts, the king of Arabia sits somberly on his throne, finding it difficult to fulfill his duties. His prime minister, the Grand Vizier, seeks a solution to this dilemma; he asks his daughters to entertain the king with stories, in hopes that the king will find pleasure in their efforts and return to his duties. The sisters are among the most beautiful women in the kingdom and their father secretly hopes that the king might find favor with one of them.

Each night Scheherazade and Dunyazade visit the palace; together they create magnificent stories, which so delight the king he can hardly wait for more. The king soon falls in love with Scheherazade, and after one thousand and one nights of marvelous stories he asks her to be his queen.