A lady and her boyfriend die, and are transformed into demon-snakes. In order that they can spend all eternity together, they are both made female snakes, which kills the love thing but keeps them in each others company.
Fast forward a thousand years, when, after meditating for the past 1000 years, the white demon snake (the other is green), is transformed back into her female human form. The green snake, Xiao Qing, was a little bit ADD and is left somewhere between a green snake and a woman. (And the role was played by a male soprano – I didn't even know they had those -, so presumably the transformation to green snake was never complete, either, since Xiao Qing used to be the white snake's lover). So anyway. Madame White Snake is celebrating her human form, when a human guy, Xu Xian, sees her dancing and falls madly in love. Xiao Qing knows this is going to end in tears. It starts to rain, Xu Xian offers M.W.S. His umbrella, and she tells him to come to her house to pick it up. He does so, and she gives him some of her own special tea, the magical powers of which – if there are any – aren't covered in the opera. Shortly thereafter, he proposed marriage, and she agrees, on one condition – once a month, she and Xiao Qing will go away for one night, and he's not allowed to ask any questions. (They have to go shed their skin – remember, they're still demon-snakes on the inside). The poor guy is love struck, so he agrees.
They get married, and are living happily, when some friar shows up. He too has been meditating a thousand years on love (no transformation, though), and is one step away from nirvana. He seeks out Xu Xian and M.W.S, as their love is now legendary. When he first lays eyes on M.W.S, his thousand year knowledge instantly tells him she's a demon-snake, and that she is pregnant with a ½ human child, which is simply unacceptable. Friar and M.W.S get in a fight, where he talks about destroying the marriage to reach nirvana, and she says that the attempt will destroy her own nirvana, which was a section that was really well written (and raises the question – is nirvana something we work towards, or something we create?). The friar creates questions in Xu Xian mind about where his wife goes, questions that are solidified when M.W.S tell him that she is pregnant, and poor Xu Xian isn't sure who the father is. The friar gives him a potion which will reduce M.W.S to her true form, and Xu Xian betrays his wife and gives it to her, and she becomes a snake again. Her tears of sorrow over the betrayal and the loss of her nirvana ultimately drown the village and everyone living there, leaving only Xiao Qing to tell the audience the sad story.