In a farcical scene involving characters hiding behind furniture, Sir Peter learns of the plotting between Joseph and Lady Sneerwell, that the rumours about Charles and Lady Teazle are false, and that his wife is merely a victim of Joseph's flattery. He is therefore reconciled with his wife, and decides that Charles deserves to marry Maria. Lady Teazle, who has had a narrow escape from ruin, delivers an epilogue warning of the dangers of scandal-making.

Act I, Scene II: We learn that wealthy businessman Sir Oliver, who is Teazle's brother, has returned from the East Indies and intends to bestow his fortune on one of the Surface brothers, his nephews.

Act II: Scene I: Sir Peter complains to his much younger wife Lady Teazle about her expensive tastes.

Act II, Scene II: Joseph fears that Maria may discover his relationship with Lady Sneerwell.

Act II, Scene III: Sir Oliver and Sir Peter discuss the brothers. Sir Peter praises Joseph's high morals, but Sir Oliver suspects that he may be a hypocrite, and decides to give the libertine and spendthrift Charles a chance to prove his worth.

Act III, Scene I: Sir Oliver describes his plan to visit each of the brothers incognito in order to test their characters. He will first visit Charles as Mr. Premium, a broker offering a loan, and then visit Joseph as Mr. Stanley, a needy relative.

Sir Peter and Lady Teazle argue again, and conclude that they should separate.

Act III, Scene II: Sir Oliver (as Mr. Premium) arrives at Charles' house.

Act III, Scene III: Charles, entertaining his raucous dinner guests, raises a toast to Maria. He then meets Sir Oliver, not recognising his long-lost uncle, and asks him for credit, with a promise that Sir Oliver (whom he believes is in Calcutta) will soon leave him a fortune. He admits that he has sold the family silver and his late father's precious library, and offers to sell the family portrait collection to Sir Oliver. Sir Oliver is horrified by Charles' disrespect for his heirlooms, and decides to disinherit him.

Act IV, Scene I: Charles auctions all but one of the family portraits to Sir Oliver, using the precious family tree rolled up as an auction-hammer. However, he refuses to sell the last portrait, which is of Sir Oliver, out of respect for his benefactor. Sir Oliver is moved, and inwardly forgives Charles. Sir Oliver later receives from Charles some of the proceeds of the auction addressed to their poor relation Mr. Stanley, which confirms his favourable opinion of Charles.

Act IV, Scene II: Sir Oliver reflects on Charles' character.

Act IV, Scene III: Joseph pretends to Lady Teazle that he has no interest in Maria, and that the Lady should have an affair with him. Sir Peter arrives; Lady Teazle hides. Sir Peter (misled by gossip spread by Joseph and Lady Sneerwell) tells Joseph that he suspects an affair between Charles and his wife. He also divulges his intention to give his wife a generous allowance and bequest. Charles arrives unexpectedly, and Sir Peter hides. Charles talks of Joseph's intimacy with Lady Teazle, unaware that Sir Peter is listening. Sir Peter now knows that Charles is not guilty of seducing his wife. Joseph, his secret exposed, has to call Sir Peter from his hiding place. While Joseph goes to answer a caller, Charles and Sir Peter discover Lady Teazle hiding. Lady Teazle admits that she came to pursue an affair with Joseph, but that having learned of her husband's generosity, she has repented, leaving Joseph friendless.

Act V, Scene I: Sir Oliver (as Mr. Stanley) visits Joseph. Sir Oliver's companion warns him about Joseph: "He appears to have as much speculative Benevolence as any private Gentleman in the Kingdom--though he is seldom so sensual as to indulge himself in the exercise of it." Joseph, not recognising his long-lost uncle, speaks ungratefully of Sir Oliver, and refuses, despite many hypocritical gestures of goodwill, to give him money. After Sir Oliver has left, Joseph hears that his uncle has arrived in town.

Act V, Scene II: Mrs. Candour, Sir Benjamin and Mr. Crabtree, members of The School for Scandal, gossip with Lady Sneerwell about Lady Teazle's misfortune. They exchange confused rumours about a duel between Sir Peter and Joseph, but Sir Peter arrives to prove them wrong. Sir Oliver laughs at Sir Peter's misfortune. Sir Peter plans to repair his relationship with his wife, after letting her suffer for a while.

Act V, Scene III: Lady Sneerwell complains to Joseph that Sir Peter, now that he knows the truth about Joseph, will allow Charles to marry Maria. They plot to use an accomplice named Snake as a witness to the relationship between Charles and Sneerwell.

Sir Oliver again visits Joseph as Mr. Stanley. Charles arrives. As Charles and Joseph try to eject Sir Oliver, Sir Peter and Lady Teazle arrive with Maria, ending Sir Oliver's pretence. Sir Peter, his wife and Sir Oliver together condemn Joseph and forgive Charles. Maria, however, declines to accept Charles, citing his friendship with Lady Sneerwell. Sneerwell and Snake arrive. Snake, however, has been bribed to turn against Sneerwell, so her lie is exposed. Joseph and Sneerwell are left to pursue their cynical partnership. Charles and Maria are reconciled.

Epilogue: Lady Teazle resolves to leave The School for Scandal.