The Birling Family are holding a dinner party to celebrate the engagement of Sheila to Gerald Croft, the son and heir of Mr Birling's rival in business. Although there are a few signs that not everything is perfect (Mr Birling is a bit too anxious to impress Gerald, Eric seems rather nervous and Sheila playfully rebukes Gerald for not having come near her in the previous summer) there is a happy, light-hearted atmosphere.
When the ladies leave the men to their port, Mr Birling has a 'man to man' chat with Gerald and Eric, advising them that a man needs to look after himself and his own family and not to worry about the wider community. As he is telling them this, the door bell rings. Inspector Goole enters, an impressive, serious man whom none of them has heard of.
Inspector Goole announces that he has come to investigate the suicide of a young working-class girl who died that afternoon. Her name was Eva Smith. After seeing a photograph of her, Birling admits that she used to be one of his employees: he discharged her when she became one of the ring leaders of a strike asking for slightly higher wages. Birling justifies sacking her by saying he paid his workers usual rates; he cannot see that he has any responsibility for what happened to her afterwards.
When Sheila enters, the inspector reveals that he would also like to question her about Eva Smith's death. He tells Sheila that Eva's next job was at a big shop called Milwards, but that she was sacked after a customer complained about her. When she too is shown a photograph of the girl, Sheila is very affected. She admits that it was her fault that Eva was sacked: when Sheila had gone in to try on a dress that didn't suit her, she had caught Eva smirking to another shop assistant- in her anger, Sheila had told the manager that if Eva wasn't fired, Mrs Birling would close their account. Sheila is hugely guilty and feels responsible for Eva's death.
When the Inspector then states that Eva, in despair, changed her name to Daisy Renton, Gerald Croft's involuntary reaction reveals that he knew her too. When the act ends, the audience is poised to find out what part Gerald had to play in her death.
After some tense words between Sheila and Gerald an attempt by Mrs Birling to usher the inspector away and the revelation that Eric Birling is a hardened drinker, Gerald admits that he too had known Daisy Renton. He had met her at the local Variety Theatre- known to be the haunt of prostitutes- and had 'rescued' her from the unwelcome attentions of Alderman Meggarty, a local dignitary. When he found out that Daisy was almost penniless, Gerald let her stay in the flat of a friend of his and she became his mistress. He ended the affair when he had to go away on business, giving her some money to see her through for a few months.
Sheila is glad to have heard this confession from her fiancé, although Mrs Birling is scandalised. Once Gerald has left to go on a walk and get over the news of Daisy's death, Inspector Goole shows a photograph to Mrs Birling. She grudgingly admits that she had seen the girl two weeks previously, when the girl- now pregnant- had come to ask for financial assistance from the Brumley Women's Charity Organisation.
Mrs Birling was the chairwoman and persuaded the commitee to turn down the girl's appeal on the frounds that she had the impudence to call herself Mrs Birling and because she believed that the father of the child should bear the responsibility. She says that the girl refused to let the father of the child support her because she believed money he had given her previously had been stolen, yet Mrs Birling is proud of refusing the girl aid. She claims that she did her duty and sees no reason at all why she should take any blame for the girl's death.
Right at the end of the scene, as Mrs Birling denounces the father of the child and claims he needs to be made an example of, Sheia (and the audience) realise that Eric is involved. When Eric comes into the room, the act ends.
There is a bitter meeting between Eric and his parents, which the inspector interrupts so that he can question Eric. Eric tells the story of his own involvement with the girl. He had met her in the same theatre bar as Gerald, had got drunk and had accompanied her back to her lodgings. He almost turned violent when she didn't let him in, so she relented and they made love. When he met her two weeks later they slept together again and soon afterwards she discovered she was pregnant. She did not want to marry Eric because he didn't love her, but she did accepts gifts of money until she realised it was stolen. Eric admits that he had taken about £50 from Mr Birling's office- at which Mr and Mrs Birling are furious.
All the Birlings now know they played a part in the girl's death. Mr and Mrs Birling are concerned about covering up their involvement, whereas Sheila and Eric are more aware of the personal tragedy and feel guilty. The inspector leaves, after delivering a strong message about how we all should be responsible for eachother.
After he has left, and the family has begun to consider the cosequences of what has been revealed, they gradually begin to wonder about the inspector. Was he real? When Gerald returns from his walk he explains that he also had suspicions about the inspector and had found out that there is no Inspector Goole on the force, which Birling confirms with a phone call.
They gradually realise that perhaps the inspector conned them- he could have showed each person a different photograph- and when they telephoned the infirmary, they realise that there hasn't been a suicide case for months. Birling is delighted, assuming they are now all off the hook, while Sheila and Eric maintain that nothing has changed- each of them still committed the acts that the inspector accused them of, even if they did turn out to be against five different girls.
Then the telephone rings. Mr Birling answers it, and after hanging up tells the family that is was the police on the line: an inspector is on his way to ask questions about the suicide of a young girl.