Welcome to Vienna, where illegal brothels, STDs, and illegitimate children are a dime a dozen. Duke Vincentio is fed up with the sinful ways of his people, but he also doesn't want to be the bad guy who enforces Vienna's strict sex laws. So, the Duke announces he's heading out of town for a while and leaves a super-strict deputy named Angelo is charge during his absence. Hopefully, Angelo will clean up the streets of Vienna.
Since Vienna's laws haven't been enforced in about fourteen years, Angelo's got his work cut out for him. He wastes no time arresting Claudio and then sentences him to death for fornicating (having sex outside of marriage) with Juliet, who is about to become Claudio's baby mama.
When Claudio's virtuous sister Isabella (a wannabe nun who wishes the convent she is about to join would be more strict) hears that her naughty brother is headed for the chopping block, she sets up a meeting with Angelo and begs for Claudio's life.
At first, Angelo says "No way, sister." But, soon enough, Angelo gets all hot and bothered by Isabella's virtue and propositions our girl. If Isabella will give up her virginity and sleep with Angelo, he will set her brother free.
Faced with a terrible dilemma, Isabella quickly refuses and it seems likely that her brother will put to death... until the Duke (who has been running around disguised as Friar Lodowick so he can spy on everyone in Vienna) hatches an ingenious plan. Isabella will agree to a secret, nighttime rendezvous with Angelo, but she will actually send Angelo's jilted fiancé (Mariana) in her place. Once Angelo does the deed with Mariana, he'll be forced to marry the girl he dumped for no other reason than because her dowry was lost at sea when her brother's ship sank in the ocean.
Turns out secret gardens are very, very dark places at night because Angelo takes the bait and spends the night (off-stage, of course) with Mariana.
Yet Angelo doesn't hold up his end of the bargain. Despite the fact that he thinks he's deflowered Isabella, Angelo sends a note to the prison that says something like this: "Dear Prison Keeper. Just a friendly reminder that, no matter what you might hear, Claudio should definitely be executed tomorrow. And please send me his head to confirm that he's dead. Your Boss, Angelo."
When the Duke finds out that Angelo has reneged on his deal with Isabella, he comes up with yet another ingenious plan – since another prisoner is set to be executed that day, his head can be sent to Angelo in place of Claudio's. This scheme encounters a minor hitch when the other prisoner declares that he's way too hung over to be executed today. (Oh great. They can't execute a man who says he's not in the mood to die right now.)
Good thing another prisoner (a pirate who looks almost exactly like Claudio) has just kicked the bucket. It's decided that the pirate's head should be lopped off and delivered to Angelo, who will be satisfied that Claudio is too dead to ever try to get revenge.
The Duke announces his imminent return to Vienna and arranges to meet Angelo at the city's gate, where Isabella shows up and publicly accuses Angelo of being a "virgin violator." Angelo denies everything until Claudio (who is very much alive) is trotted out to confront Angelo.
Angelo immediately confesses but the Duke sentences him to death anyway. Isabella takes pity on him, gets on her knees, and begs for Angelo's life. The Duke is so moved that he pardons Angelo and Claudio for their crimes and then proposes to Isabella, who is completely silent, either because a) she is so happy she is speechless or, b) she is horrified that another powerful man has propositioned her when all she wants to do is become a nun.