Salanio and Salerio discuss rumours that the merchant Antonio's ship has been wrecked on the Goodwin Sands. They accost the Jewish moneylender Shylock, who is still smarting at the flight of his daughter, and Shylock confirms that regardless of what may have happened to Antonio's ship, he will require his bond (a pound of his flesh) to be paid in full. He laments that because he is a Jew, he is looked down upon by Christian society, but has the same human sensations and emotions.

Another Jew, Tubal, reports to Shylock that he has been unable to find his daughter, and confirms that Antonio has lost his ship. Shylock tells Tubal to look for an officer, so that he can instigate proceedings against Antonio.