In the tavern in Eastcheap (a street in London) Prince Hal and Poins await the arrival of Falstaff. The Prince amuses himself by playing a practical joke on Francis, a bartender, engaging him in a silly conversation while Poins, from another room, keeps calling for him. At one point both Poins and Hal are calling for him, and poor Francis does not know what to do.
Falstaff arrives, with Bardolph, Gadshill and Peto. Falstaff calls for some wine (sack). When he sees the Prince he accuses him and Poins, in a light-hearted way, of being cowards. Poins threatens to stab him, and Falstaff retracts the accusation. But then he says he wishes he could run as fast as Poins. He then tells the story of how he and his band were robbed. Of course, he exaggerates, saying they were attacked by a hundred men, and he fought with a dozen of them for two hours, sustaining a dozen wounds. His sword is also damaged.
Gadshill then joins in, telling of how they robbed at least a dozen men. Falstaff interrupts and says it was sixteen at least. Then he repeats his claim to have fought with them, but this time he raises the number of his opponents to at least fifty. He feels sure that he has taken care of two of the attackers, who wore buckram suits (the men in buckram suits were of course Hal and Poins). Then he raises this number to four, then seven, then nine, then eleven, as the Prince and Poins question him. After he fought with those men, some men in green came at him, Falstaff says.
This time the Prince challenges him, asking how he knew the men were in green, since it was dark. After some good natured name-calling, in which Falstaff and the Prince try to outdo each other, the Prince explains what really happened. Falstaff reacts quickly, saying that he knew all along that one of the men who waylaid them was Prince Hal. He argues that he was certainly not going to fight back against the heir to the throne, and that was why he ran. With that, he says he is glad they still have the money they stole, and calls for a celebration.
The Hostess enters, saying there is a man outside, sent from the King, who wants to speak to Prince Hal. The Prince asks that he be sent away. Falstaff offers to do this, and exits.
While Falstaff is out, Peto and Bardolph, encouraged by the Prince, tell more of the robbery. It turns out that Falstaff damaged his own sword with his dagger, and told the others to do the same. They used speargrass to make their noses bleed and then daubed their clothes with the blood-all so it would appear they had been in a real fight.
Falstaff returns with news. Hal must return to the court in the morning, because there is rebellion in the land. He tells the details of what Hotspur, Glendower and Douglas the Scot are planning, saying that the King is very anxious about the situation.
The Prince acts as if he does not care, but Falstaff tells him he better have an answer prepared when he meets with his father the next day. The Prince suggests they practice for it there and then, with Falstaff acting as his father. Falstaff then makes a speech, imitating the King, in which he bemoans the low company the Prince keeps. But there is one exception, and that is a man named Falstaff, who is a virtuous man. The Prince should retain him as a companion, and ditch all the rest.
Then the Prince suggests they switch roles. He will play Falstaff and the Prince will play his father. This time, the Prince, pretending to be the King, tells his son he has been corrupted by "an old fat man," and he proceeds to damn and insult Falstaff every way he can.
But Falstaff, playing the Prince, is quick with his response. He denies that Falstaff is a bad influence, and pleads with the King to banish everyone except him from the Prince's side.
The charade is interrupted by the Hostess, who announces that the sheriff with a group of constables is at the door, wanting to search the place. Falstaff, who fears arrest, hides, and everyone exits except for the Prince and Peto. The sheriff enters and says he is looking for a gross fat man. The Prince says that such a man is not there, although he words his response in such a way that it is not, technically, a lie. The prince then tells the sheriff he will send
Falstaff to him the next day to answer any charge against him.
After the sheriff exits, the Prince asks Peto to get Falstaff, but Peto reports that he is asleep. They turn out his pockets. The Prince says he will go to the court in the morning. They will all soon be off to the wars. He will get Falstaff a company of infantry to command (which presumably will get him off any offenses that the Sheriff may be planning to charge him with). The Prince also promises that the money they have stolen will be paid back with interest.
In the midst of the comedy of this scene, the relationship between Falstaff and the Prince is brought into sharp relief. There is a mutual fondness between them, but Falstaff well knows there are bounds beyond which he cannot step, since he is dealing with the future King of England. This is shown comically when Falstaff explains why he ran when he was attacked: he knew one of the assailants was the Prince, and he could never raise arms against the Prince of Wales: "The lion will not touch the true prince," he says, referring to a traditional belief about lions.
The play-acting incident, in which Falstaff and the Prince alternately pretend to be the King admonishing his son, have an undercurrent of seriousness. When Falstaff, pretending to be the King, says bluntly, "Share the son of England prove a thief and take purses?" and says that the Prince is being defiled by the company he keeps, he is hitting the mark, and the Prince must know it. The same seriousness lies behind the comedy when the Prince pretends to be his father and tells his son "there is a devil haunts thee in the likeness of an old fat man" (lines 446-47). This tirade against Falstaff, although delivered in jest, nonetheless brings to the audience's mind the need for Prince Hal to free himself from Falstaff's influence, and prepares the way for it (although such a development will not become complete until the end of Henry IV, Part 2).
Also in this scene, Shakespeare is careful to keep stoking the rivalry and apparent mutual contempt between Prince Hal and Hotspur. The Prince's mocking words about Hotspur (lines 102ff) match Hotspur's own words about Prince Hal in Act 1, scene 3.