The action takes place in British India in the late 19th century
The home of Nilakantha, a Brahmin priest, surrounded by a shady forest. It is early morning. Hindu men and women led by Nilakantha and his daughter Lakmé welcome the dawn of the new day with a prayer to Brahma. After prayer, all depart. Following the ceremony, Nilakantha, leaving his daughter to be cared for by her companion Mallika, together with his slave Hadji set out towards a sacred pagoda. Meanwhile, the girls decide to take a boat out to pick a lotus flower. In their absence, Ellen and Rose – daughters of the Governor of India – enter this place, which is forbidden to all foreigners, together with their governess Mistress Bentson and two British officers, Ellen's fiancé Gérald and his friend Frédéric. They are all eager to learn about Hindu customs, but on discovering that this is the home of Nilakantha the ferocious fanatical Brahmin they hasten to depart. Only Gérald remains behind: having by chance seen Lakmé's precious ornamental headpiece, he intends to sketch it in his album whatever the cost. Lakmé returns and her beauty stuns the Englishman. The foreigner is unperturbed at her warning that disaster and death await him should he be found in this sacred place by her father. Love for the courageous officer steals into Lakmé's heart and she, upon seeing the Brahmin in the distance, begs Gérald to hide. Nilakantha guesses that some European has visited his home from a piece broken fencing and swears revenge on this profanity.
A town square. A folk festival is at its height. Lakmé thinks wistfully of Gérald. Nilakantha, supposing the reason for her sadness to be some proffered insult, resolves to seek out her abuser. Lakmé's embarrassment on seeing Gérald, who has approached her as she was singing, reveals to the Brahmin who his enemy is. Lakmé, left alone with her beloved, begs him to run away with her. He is slow to decide. Meanwhile, a holy procession of the priests is making its way across the square. Nilakantha, grasping at a suitable moment, sneaks up to Gérald and stabs him with a dagger. The shocked Lakmé commands Hadji to carry the wounded man after her.
A forest. Lakmé stands guard over the wounded and sleeping Gérald, and when he wakes up he recounts the story of his salvation. The Englishman, enchanted by the beautiful maiden, is ready to be united with her forever and – in line with Hindu custom – drink, together with her, water from a sacred stream using the same cup. Lakmé hastens to fetch the water. In her absence, Frédéric appears and convinces his friend to come back to the regiment, which is ready to set off. Gérald is aware of a sense of duty, and he promises his friend to follow the latter's advice. When she returns, Lakmé in horror sees the alteration in her beloved and decides to kill herself with a toxic flower. Her beloved once again submits to the enchantment – and together with her drinks the sacred water from the cup. Nilakantha, on discovering Lakmé and Gérald together, wishes to kill the Englishman. His daughter, however, declares that they have been married. The poison begins to take effect, and the girl dies peacefully in the embrace of her beloved.