The play is set in a city called Ephesus. Egeon, a merchant from Syracuse who has been sentenced to death, is pleading for mercy from Solinus, the Duke of Ephesus. The Duke protests that he cannot act in defiance of the law. He explains that there has been a disagreement between the cities of Syracuse and Ephesus and that if any merchant from either city is found in the other, he must pay a fine of a thousand marks or be executed. Egeon does not have the money and says he is resigned to die, as this will end his "woes." The Duke, his curiosity awakened, asks Egeon why he came to Ephesus. Egeon tells the story of his life.
Egeon says he was born in Syracuse and married. He grew wealthy by trading with the city of Epidamnum. His agent in Epidamnum died, leaving his affairs in disarray. Egeon was forced to travel there to sort things out. His pregnant wife followed him. While staying in an inn in Epidamnum, she gave birth to twin boys. At the same time, and in the same inn, a poor woman also gave birth to twin boys. Egeon bought her boys to bring up as servants to his sons.
While they were returning to Syracuse, a storm blew up. The sailors took a boat and abandoned ship, leaving Egeon and his family to their fate. Egeon's wife tied herself with one son and one of the servants to a mast to prevent them being swept into the sea. Egeon tied himself, with the other son and the other servant, to another mast. The weather grew calmer and they saw two ships, one from Corinth and the other from Epidaurus, sailing towards them. But before the ships reached them, their own ship hit a rock and split in two. Egeon's wife and one son and servant were picked up by the ship from Corinth. Egeon and the other son and servant were picked up by the Epidaurian ship, but they were unable to catch up with his wife's ship and the family was separated.
When Egeon's son, the youngest of the twins, reached eighteen, he became curious about his brother, whose name, Antipholus, he had adopted. Antipholus of Syracuse (as he is called to distinguish him from his brother Antipholus of Ephesus), left home with his servant, Dromio of Syracuse, who had likewise lost his twin brother (Dromio of Ephesus), to seek for the lost half of his family. Egeon soon followed, searching now for both halves of his family. Eventually he reached Ephesus.
The Duke is moved by Egeon's story. He tells him that though he cannot alter his sentence, he will postpone the execution for one day to give him time to raise the money to buy his freedom. Egeon feels that his case is hopeless but goes off into the city to try to find the money.
The first scene introduces the major theme of the play, identity. There are two sets of twins, the Antipholuses and the Dromios. In Shakespeare's day, as today, the intense bond that often exists between twins was recognized. Though twins in close contact can struggle to assert their individual identity, it can also be the case that a twin who is separated from his or her sibling suffers a loss, as if of his or her own identity. It is as if half of them is missing. This feeling of loss drives Antipholus and Dromio of Syracuse to leave home to find their 'other halves.'
In addition to the bond between the twins, identity is also explored through the paternal/filial bond. Egeon loses first his wife and one son, then his other son. He now feels that his life is not worth living. Thus his sense of identity is entirely bound up in his family. The Duke's inclination to give Egeon another chance opens up the possibility of redemption from his wretched and despairing state.
Another theme introduced here is that of buying and selling. Having transgressed a law established by the merchant class, Egeon must buy his life with a thousand marks - or die.