- We discover that the young woman who caused such a stir with Lefferts and Jackson is the Countess Olenska, who has arrived from Europe two days before.
- Countess Olenska is Mrs. Manson Mingott's granddaughter. Btw, Mrs. Manson Mingott herself has had a colorful history. Born Catherine Spicer, she was left a widow by her wealthy husband at the age of 28. She then proceeded to live the next fifty years in high style, consorting with all kinds of people abroad, including dukes, ambassadors, papists (i.e. Catholics), and dancers.
- Lefferts and another man in the box, Thorley, gossip about Countess Olenska's past. She was married to a wealthy Polish nobleman, who turned out to be a horrible womanizer and serial cheater. Rumor has it that Countess Olenska left him, shacked up with his secretary, and finally ended up at her grandmother's in New York City. Scan-da-lous.
- All of this gossip annoys Archer because it is about a relative of his lady-love, May. He worries about the possible damage to her family's reputation. No one wants to be associated with a scandalous woman.
- At the end of the act, Archer visits the Mingotts's box.
- Mrs. Welland introduces Archer to Countess Olenska.
- Archer asks May whether he can tell her cousin about their engagement, and whether he can announce their engagement at the ball later that evening. May consents.
- Countess Olenska reminds Archer that they used to play together as children, and that Archer once kissed her. Archer finds her attitude toward New York society "disrespectful."