We move to the one-bedroom suite shared by Freddie and his chess second, Florence Vassy, who is also his lover. They laugh at the disparaging headlines ("Commie Newspapers") before Freddie goes to talk to reporters ("Press Conference"). Freddie loses his cool to the penetrating questions, and finally goes over the top when one reporter makes a reference to him sleeping with Florence. He punches the reporter out and storms off, leaving Florence to clean up the mess.

This is watched, on television, by Freddie's opponent - up and coming Russian grandmaster Anatoly Sergievsky. Anatoly discusses Trumper's antics with his KGB minder, Alexander Molokov, and they come to a disagreement on his mental state ("Anatoly & Molokov"). We begin to see the seeds of Molokov's plans around Florence and Freddie, and Anatoly voices his discontent with his station in life ("Where I Want to Be").

A delegates' conference commences after this, and we find that the match will indeed pit "US vs. USSR." The Arbiter follows this up with his splashy entrance, laying down the law in another big dance number ("The Arbiter's Song"). There is a discussion over specific squabbles with the match setup, which ends in television exec Walter de Courcey requesting a "discrete display of wares" In the arena. The Arbiter agrees, and we move to match time for a brief "Hymn to Chess." We find out that Walter's definition of "discrete" is quite lavish in "The Merchandisers," and the players settle down to play chess ("Chess #1").

During the game, Anatoly is constantly fidgety; we see Freddie, who is playing well, get annoyed and eventually kick his opponent under the table. Both players stand up, and Anatoly shoves Freddie; Freddie counters by knocking Anatoly back onto the chess board and storming off. The Arbiter voices his displeasure ("The Arbiter - Reprise"), and he remains behind with Florence, Molokov, and Anatoly to discuss how "A Model of Decorum and Tranquility" becomes a battleground for rival ideologies to slug it out with glee. Florence and Molokov are the last two remaining after the debate, and they agree to have their players meet over the issue ("Florence & Molokov").

Meanwhile, we see Freddie and Walter debating money matters when Florence arrives; Walter blows him off and leaves Florence to pick up the pieces ("1956 - Budapest is Rising"). Freddie invokes Florence's past as a Hungarian refugee in an attempt to stir up her anger against the Russians, but she wants nothing to do with it; Freddie leaves, and Florence ponders if she may be on "Nobody's Side."

Florence goes to the meeting alone, and encounters a group of drunken locals, who sing a German drinking song called "Der Kleine Franz." [Note: "Der Kleine Franz" was shortened to one verse before it was completely cut from the show during the London run. It is not in any other significant versions.] She finally meets up with Anatoly, and falls for him despite her own internal objections during a one-on-one walk ("Mountain Duet"). Anatoly returns the feeling, and they kiss before the song's end. Freddie shows up at an inopportune moment, and has a few words for Florence ("Who'd Ever Think It?"). He tells Anatoly that the match can go on nonetheless, for more money.

Freddie plays horrible chess, and winds up losing the next three games. He blows up at Florence ("Florence Quits") before he goes off on a tirade about his bad childhood ("Pity the Child"). Meanwhile, we find that Anatoly is defecting to England, where Florence lives, though he does not have an easy time getting that done ("Embassy Lament"). She reflects on the fact that she is basically changing her life for a total stranger ("Heaven Help My Heart"). Walter, who helps Anatoly in all this, allows "The Reporters" access to the new champion and defector; Anatoly sings them an internationalist "Anthem" in defiance of their political questions.

A year later, in Bangkok, Thailand, Anatoly's title is on the line again. We are introduced to the setting by a dance piece ("The Golden Ballet," a very dangerous number that was later shortened to the familiar "Bangkok" instrumental), and then by Freddie, now a reporter commenting on the match ("One Night in Bangkok"). Florence and Anatoly are disrupted in their happiness by Freddie's appearance, and by the news that Anatoly's estranged wife Svetlana may come to Bangkok, giving him "One More Opponent" to beat. Still, they sing of their love for each other ("You and I").

Meanwhile, Molokov celebrates with his cronies over the new challenger, Leonid Viigand, who will give "The Soviet Machine" its next victory - a careful, controlled, emotionless player; the number can only be described as a mixture of Cossack and disco dancing. Molokov phones Walter and gives him information about Florence's father, who was believed to have died in the 1956 Hungarian uprising. Walter has Freddie change tack in an interview with Anatoly, asking biting questions about his defection, Florence, and his wife ("The Interview"). Anatoly storms out, much to Walter's lasting delight.

The forces all align for "The Deal," a megascene narrated by the Arbiter. Molokov puts pressure on Svetlana to convince Anatoly to lose; she tries to shame him out of victory, but to no avail. Walter approaches Florence with news about her father, but she refuses to ask Anatoly to throw everything he has fought for away. When they confer, Walter deceives Molokov into thinking that he has convinced Florence, but calls in a "trump card" anyway: Freddie is to approach Anatoly, and then Florence, but is rebuffed each time. Freddie winds up confessing that he still loves Florence, but "The Deal" ends in a stalemate.

Afterward, an upset Florence and Svetlana sing of the man they both love ("I Know Him So Well"). Freddie, ashamed of what he's done, meets up with Anatoly to help him with strategy ("Talking Chess"). Then, in a gripping "Endgame," Anatoly is forced to share the board with his own personal demons - assailed on every side by detractors, he nonetheless miraculously comes out a victor. Having won, Anatoly decides to trade himself for Florence's father. They have one final duet ("You and I - Reprise") wherein they finally give up the affair that has taken them so far. Walter comes to inform Florence that Anatoly has done a very good thing, and that her father will soon be recovered - if, that is, he is still alive. Florence realizes that she has been tricked, and concludes on a final, tearful reprise of "Anthem."