In his London studio, artist Basil Hallward puts the finishing touches on his latest portrait, that of a young man. Although Lord Henry, who is visiting with Basil, asks about the young man's identity, Basil declines to answer, noting his preference for secrecy. Basil never intends to exhibit the painting, because if he did, it would bare the deepest feelings in his soul. However, Basil lets slip that the subject of the portrait is Dorian Gray, who shortly thereafter pays the two men a house call.

Lord Henry immediately begins to influence Dorian, suggesting that he should treasure and guard his youth and beauty while he has them, because they will soon fade. Terrified of aging, Dorian wishes he could trade his soul to stay as young as he looks in the portrait; a short while later, he again wishes that he could stay young while the image in the painting aged. The portrait thus begins to take on a life-like existence; in fact, Basil's threat to burn the portrait is likened to "murder" and Basil prefers the company of the portrait to the real Dorian.

Dorian falls in love with a young actress, Sibyl Vane, a woman he barely knows. She plays a different woman at each night's performance, earning the label of "genius" from Dorian, who is as smitten with her acting more than with her personality. They become engaged, much to the surprise of Lord Henry and Basil.