As the opera opens, the curtain rises upon a sooty cave, where the dwarf Mime is alone at work, hammering a sword upon his anvil and complaining bitterly of the strength and violence of young Siegfried, who shatters every weapon he makes.  In spite of repeated disappointments, however, Mime the Nibelung works on.  His sole aim is to weld a sword which in the bold youth’s hands will avail to slay his enemy, the giant Fafnir, the owner of the ring and magic helm, and the possessor of all the mighty hoard.

While busy in his forge, Mime tells how the giant fled with his treasure far away from the haunts of men, concealed his gold in the Neidhole, a grewsome den.  There, thanks to the magic helmet, he has assumed the loathsome shape of a great dragon, whose fiery breath and lashing tail none dares to encounter.

As Mime finishes the sword he has been fashioning, Siegfried, singing his merry hunting song, dashes into the cave, holding a bear in leash.  After some rough play, which nearly drives the unhappy Mime mad with terror, Siegfried sets the beast free, grasps the sword, and with one single blow shatters it to pieces on the anvil, to Mime’s great chagrin.  Another weapon has failed to satisfy his needs, and the youth, after harshly upbraiding the unhappy smith, throws himself sullenly down in front of the fire.  Mime then cringingly approaches him with servile offers of food and drink, continually vaunting his love and devotion.  These protests of simulated affection greatly disgust Siegfried, who is well aware of the fact that they are nothing but the merest pretence.

In his anger against this constant deceit, he finally resorts to violence to wring the truth from Mime, who, with many interruptions and many attempts to resume his old whining tone, finally reveals to him the secret of his birth and the name of his mother.  He also tells him all he gleaned about his father, who fell in battle, and, in proof of the veracity of his words, produces the fragments of Siegmund’s sword, which the dying Sieglinde had left for her son:—­

   ’Lo! what thy mother had left me! 
    For my pains and worry together
    She gave me this poor reward. 
    See! a broken sword,
    Brandished, she said, by thy father,
    When foiled in the last of his fights.’

Siegfried, who has listened to all this tale with breathless attention, interrupting the dwarf only to silence his recurring attempts at self-praise, now declares he will fare forth into the wild world as soon as Mime has welded together the precious fragments of the sword.  In the mean while, finding the dwarf’s hated presence too unbearable, he rushes out and vanishes in the green forest depths.  Left alone once more, Mime wistfully gazes after him, thinking how he may detain the youth until the dragon has been slain.  At last he slowly begins to hammer the fragments of the sword, which will not yield to his skill and resume their former shape.