Act one
In the tiny Duchy of Gerolstein, the army leads a peaceful life because there are never any wars in this small state as it is strategically unimportant. For years, the courtiers arrange pretend wars to allow the Grand Duchess to pursue her passionate interest in attractive soldiers. One of these soldiers is Fritz, who loves the goose maiden Wanda. Commander-in-chief General Boum, the minister Baron Puck and the lady-in-waiting Erusine von Nepumukka are starting to worry: it seems likely that with advancing age, the Grand Duchess might devote all her passion to one single soldier and dismiss her previous confidantes at court. In order to prevent this, Baron Puck declares war on one of the neighbouring states. – The Grand Duchess reviews her troops. This time round, soldier Fritz particularly catches her eye. To the fawning coutiers’ horror, she rapidly promotes him through the ranks until he is captain of the cavalry. Prince Paul, an heir to a foreign throne to whom the Grand Duchess has been betrothed by his father and the Gerolstein ministers, arrives with his tutor Baron Grog. He pleads with the regent to set a date for their wedding at last, but she rejects the Prince. General Boum wants to explain the plans for the coming war to the Grand Duchess, but she insists on referring to her new cavalry captain for his opinion. When General Boum objects to taking advice from someone of a lower rank, the Grand Duchess simply promotes Fritz to general, too. Erusine and Puck placate the insulted Boum: why not let the naive Fritz lead the war! Boum resigns, and the Grand Duchess presents the new general to the troops. The fact that he insists on saying goodbye to his beloved Wanda makes the Grand Duchess quite nervous indeed. However, she then gives him her father's rapier to bring him luck in battle – and off he goes to war!

Act two
The women are excitedly waiting for the soldiers to return. To the horror of Erusine, Puck and Boum, Fritz really has managed to find an enemy and has actually won the war. The Grand Duchess remains alone with Fritz and confesses her love to him in code. However, poor Fritz doesn't understand a thing. Erusine, Puck and Boum have teamed up with the rebuked Prince Paul and decide to do away with Fritz. They meet in a corridor of the palace in front of the Red Chamber, where political murders are traditionally committed in Gerolstein. However, the Grand Duchess surprises them. She is beside herself: Fritz has asked Wanda to marry him. She immediately drops her favourite and joins the conspiracy.

Act three
The conspirators prepare the murder of General Fritz. However, the Grand Duchess has now transferred her affections to Baron Grog, who in turn promises her certain favours if she would only marry Prince Paul at last. The Grand Duchess has the murder conspiracy called off and prepares for her wedding. – In the meantime, Fritz has married his Wanda. However, they are constantly interrupted on their wedding night just at the wrong moment, not least by Puck and General Boum, who sends his successor into battle again. The Grand Duchess celebrates her wedding with Prince Paul in the hope that Baron Grog will at last return her affection. Fritz complains bitterly that he has been lured into a trap: instead of being sent into battle, he has been put inside a barrel and rolled away. The Grand Duchess demotes her general back to ordinary foot soldier, which actually makes him very happy. The Grand Duchess now wants to appoint Baron Grog as her new general and highest-ranking minister, but when she learns that he in fact has a wife and seven children, she leaves everything as it is. With Prince Paul by her side, she still has her troops to comfort her, after all.