The Heiress of Vilkači tells the story of two neighbouring estates. One of the houses has always been more prosperous than the other, and there are suspicions that this situation is the result of witchcraft. The rich, tuneful music reflects influences of Wagner, Dvořák, and Smetana, subtly combined with elements of Latvian folk music.
The Dievlodziņi household is raising glasses in honor of the engagement of its eldest son Raitis with Ieva, the daughter of a wealthy landlord. Raitis' friend Pēters leads the merriment. The mirth is interrupted by local mendicants. They admonish that youth and happiness are fleeting, and life's end brings pain, disappointment and death. Ieva wants to chase the beggars away and condescendingly responds to mendicant Bērtulis' warning not to scorn the dispossessed.
Pēters salutes Raitis as the future head of the Dievlodziņi household, but the family's youngest son Andis interjects; he will become the head of Dievlodziņi, while Father Dievlodziņš will buy the neighbors' homestead Vilkači for Raitis. At first Dievlodziņš denies this, but then he starts telling the story about the long-standing animosity between the neighboring homesteads. The Dievlodziņi household has always been hardworking and God-fearing, but it does not keep up with the prosperity of the Vilkači family.
Dievlodziņš is convinced that the Vilkači property has been gained through sorcery and bewitching the fortune of neighbors. Day after day, Dievlodziņš has prayed to God to be unbound from the terrible curse, and-believing that the prayer has been answered when old Vilkacis dies without heirs-Dievlodziņš would have the right to buy the Vilkači homestead. However, the hopes are dashed: An heir to Vilkači has been found.
Into the homestead compound enters a beautiful stranger, Maruta. She shyly sits down with the mendicants and refuses a beer mug offered by Pēters. The offended Pēters encourages the young men of the family to teach the proud outsider a lesson, but Raitis defends Maruta. The woman reminds him of an image he once saw in an enchanting dream. Maruta admits that she is the heiress of the Vilkači. Dievlodziņš curses her.
It is a winter night in the Vilkači household, and it is snowing outside. The family is busy with evening tasks; only Maruta is looking out the window. Her thoughts dwell on Raitis. She asks others why the neighbors are so hateful toward the Vilkači farm. An aged servant, Dace, tells an old tale: Long ago a young man of the Dievlodziņi family fell in love with a daughter of the Vilkači clan, and they met up at the large rock by the lake. But later when the daughter gave birth to a child, the young man abandoned her and married someone else. After that moment, he fell ill and deteriorated until he died an early death.
Suddenly, a rock flies through the window. Those in the house run out and catch Andis. They want to give him a thrashing, but he asserts that Raitis is the culprit. Raitis appears, yelling curses at the witch of Vilkači, but Maruta holds back the mob from seeking reprisal. She will save the thrown rock as a precious gift.
It is midsummer night, near the forest, at the edge of a lake by a large rock, called the witches' sauna. Dace is walking in the forest, looking for medicinal herbs. When she leaves, Raitis appears by the rock to spy on the Vilkači homestead-one of many times he has done so. He confesses that he has fallen in love with Maruta.
Looking for Raitis, Ieva appears, but Raitis tells her to go home. He leaves, as if to check on the fishing nets in the lake, but Ieva stays alone with her pain-Raitis has become indifferent towards her.
Dace enters, and Ieva turns to her, asking for a drug with which to bind her lover. Dace teaches Ieva a spell: She is to catch a live bat and at midnight is to hold it in an anthill, until the ants eat the bat alive, devouring its flesh from the bones. Then the bat's nails are to be stuck into the clothes of the one to be charmed. Ieva steals away to cast the spell, while Dace continues to pick herbs.
Raitis returns and does not find Ieva, but he hears Maruta's voice-she is taking a walk at the edge of the lake. They meet, and midsummer night becomes their first night of love.
It is Sunday morning at church, and parishioners sing the last chorale. Grieta speaks to Pēters, telling him that she has given birth to Pēters' child, but that the "proper" people in the community are denying her work and shelter for her and the baby. She expects support from Pēters, but the young man rejects that he is the child's father and abusively rebuffs the young woman.
Ieva invites RaitIs to hasten their wedding. He agrees; they could have the wedding in a month. The conversation is interrupted by the arrival of the Vilkači household. Maruta is holding a newborn. Parishioners do not want to allow the Vilkači clan into the church. The young man Andis notices that Raitis' clothes have bat nails stuck in them, and everyone immediately agrees that this was done by the head of the Vilkači household, Maruta.
Dievlodziņš arrives, and Maruta requests entry into the church, to christen her child. However, Dievlodziņš-the church elder-denies her this, as the child has been born out of wedlock and Maruta does not reveal the child's father. She proudly leaves with her household. Grieta begs to join them, and she is kindly accepted. Once again Ieva approaches Raitis, but he rejects her; he realizes that his fiancée has lodged the bat nails into his clothes.
At the edge of the lake. At night before sunrise, a storm is approaching. Dace and Grieta are working. When both leave, Raitis stealthily approaches, and he is secretly followed by Dievlodziņš. The lightning grows stronger and thunder crashes louder. The father calls out to his son, asking what he is looking for on the Vilkači side. He is certain that the witch Maruta has put his son under a spell, and he asks him to marry Ieva. Raitis says that Ieva repulses him, and that he will not marry her. The father threatens that Raitis will no longer be his son.
Suddenly on one side of the horizon a glow arises-Dievlodziņi is on fire. At once on the other side a blaze rises-Vilkači is also burning. Raitis starts for Vilkači, and his father tries to stop him, but it is for naught. Dievlodziņš then wants to rush home, but he collapses to the ground. Maruta finds him thus fallen.
Neighbors of the area arrive, running to see how the witch nest Vilkači is burning. Among the mob are Pēters and Andis. Dievlodziņš dies, and the mob prepares retribution towards Maruta, whom they blame for his death. But Raitis rushes forth with the Vilkači household. They tell how the Vilkači compound has burned down and only a small amount of valuables were saved from the fire.
Everyone is surprised when Raitis asks forgiveness from Maruta and admits that he is her child's father. As both old houses burn away, so too must the long-standing animosity be aired out: "May oblivion heal all wounds, may injustice be forgiven by God!"