The play begins with Rodrigo reprimanding Iago for not doing his job. Rodrigo is paying Iago to pursue Desdemona for him, and he has just learned that she has eloped with Othello. Iago reassures Rodrigo that the plan will eventually work because he himself is motivated to bring Othello down; Othello promoted Michael Cassio to lieutenant rather than Iago, and Iago believes that he was more deserving of the promotion. Iago starts his plan by telling Rodrigo to try and foil Othello and Desdemona's marriage by telling Brabantio, Desdemona's father, about their secret marriage.

Rodrigo agrees and both proceed to Brabantio's dwelling. Once there, they cry out to Brabantio, proclaiming that his daughter has been stolen from him. Brabantio is furious and proceeds to confront Othello. Iago, knowing of Brabantio's plans to confront Othello, rushes to him to warn him. Iago once again deceives Othello into thinking that he is his friend by warning him about Brabantio, when, in reality, he ignited the conflict in the first place. Othello diffuses the situation when he agrees to take the matter to the duke.

After Rodrigo hears from Desdemona about her passionate love for Othello, he believes that his hopes of winning Desdemona have gone up in smoke. But once again, Iago reassures him that all will be well in the end. He insists that Rodrigo continues to pay him, "Put money in thy purse", he says repeatedly. When Rodrigo exits, Iago, in a soliloquy, confesses his plan to the audience to cheat Rodrigo out of his money and break up Othello's and Desdemona's marriage by convincing Othello that Desdemona is unfaithful to him.

On the way to Cyprus, Iago is conversing with Cassio, Emilia and Desdemona. He notices that Cassio is very affectionate with Desdemona and decides that this will help convince Othello that she is cheating on him. Once they arrive, Iago is speaking with Rodrigo, and he tells him that he has competition in the race for Desdemona; Cassio, he claims, he second in line, to Desdemona's hand, if she were to leave Othello. Iago suggests that Rodrigo start a quarrel with Cassio, while he is drunk, in order to provoke him to commit an act that will lead to Cassio falling out of favour with Desdemona. Iago's real reason for this plot is to have Cassio fall out of favour with Othello, so he will demote him, and will put Iago in his position. Once at the party, Iago convinces Cassio to drink.

After much consideration, Cassio concedes and drinks. He drinks until he is intoxicated and begins to quarrel with Rodrigo. During the brawl, Montano, the Governor of Cyprus, attempts to restrain Cassio, when suddenly Cassio stabs him with his sword. Othello is notified of Cassio's crime and demotes him from Lieutenant After the brawl, Cassio laments on the permanent damage that has been made to his reputation because of the brawl. He fears that Othello will never trust him again. Iago suggests that he speak with Desdemona, because she, after all is," the captain's captain", meaning that she can manipulate Othello as she wishes.

If Cassio can convince Desdemona to pity him, perhaps she can convince Othello to restore Cassio's position. Once Cassio leaves, Iago comments on his plan; he jokes that even when he tries to do good, he ends up doing evil, because, in his counselling of Cassio, he advised him to spend more time with Desdemona, and this will only help to strengthen Othello's belief that Desdemona is unfaithful to him. In Act iii, Scene iii, Iago begins to tell Othello of his suspicions that Desdemona is being unfaithful. He mentions that he often sees her being very affectionate with Cassio, and believes that something more is going on between the two. At first. Othello doesn't believe Iago, but after Iago seems very hesitant about offending his friend, Othello begins to have doubts.

Iago suggests to Othello to keep a close watch on Desdemona and to see if she talks often of Cassio. When Desdemona next meets with Othello, he complains of a headache. Desdemona offers him her handkerchief, which he gave her as a gift. However, he refuses saying that it is too small to bind around his head. Othello and Desdemona leave, with the handkerchief still lying behind them on the floor.

Emilia sees the handkerchief, steals it, and gives it to Iago. As Iago derives a plot to plant the handkerchief in Cassio's room, Othello bursts in, in a fit of rage. He yells at Iago, saying that he would rather be completely, and surely deceived, rather than having suspicions without proof. He demands that Iago bring him evidence. Iago responds by saying that it would be impossible to actually catch the two in the act of making love, but he recalls once, seeing Cassio wiping he beard with his handkerchief. Othello is absolutely furious and vows revenge on both Desdemona and Casio..