In Granada in Spain, Sibilla works as a dancer in a squalid cabaret called El Dorado, struggling to earn enough to care for her sick child. The boy's father Estiria, a prominent citizen, refuses them both help and recognition, fearful of jeopardising the engagement of his adult daughter Iliana to a wealthy nobleman. Iliana however slips away from her engagement party to meet her real lover Hedwick, a Swedish painter. Sibilla, in desperation after a further rejection by Estiria, sees an opportunity to blackmail him by locking the lovers overnight in their meeting-place in the Alhambra.

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