A young man named Stuff tends bar at the Royal Palms cocktail lounge, as Boss's mistress Miss Lucy comes in dressed in a ball gown, angry about the fact that she was not allowed to sit at the banquet table. He asks her what happened to her finger, and she tells him that Boss gave her an Easter egg with a jewel box in it. As she opened the jewel box, and saw the diamond clip inside, Boss slammed the lid on her finger. She tells Stuff that Boss then told her to go downstairs and write a description of the clip with lipstick on the mirror in the women's room.
They are interrupted by the entrance of a mysterious tall man in "country" clothes. Lucy asks him if he's with the band, but he tells her he's not, he's there to see Boss Finley's talk. Soon enough, Miss Lucy recognizes him as The Heckler, a man who shows up at political meetings and asks pointed questions. He tells her that when he shouted his questions at the rally in New Bethesda, he got hit in the Adam's apple with a pistol and is now having trouble speaking. Miss Lucy tosses him a jacket and tie and tells him to stay still at the bar until Boss starts speaking.
Stuff and Miss Lucy gossip about the fact that Chance is staying at the hotel with Alexandra Del Lago. Chance enters and takes a sip of a martini on the bar. He is followed by Aunt Nonnie, who urges him to come outside into a royal palm grove. He follows her and she tells him to get out of St. Cloud, for his own good. He recklessly takes a pill, and tells Aunt Nonnie that after he directed a play that won the state drama contest, he was destined for great things.
Nonnie reminds him that they only got honorable mention, while Chance remembers that it was because he forgot his lines. He remembers that he bribed the conductor with many valuable items to let him have sex with Heavenly on one of the vacant train cars. "It was from that time on, you've changed," says Nonnie, and Chance agrees that from that night on, he promised himself he would never come in second in anything. Chance tells Nonnie that he wants to stage a beauty contest that Heavenly can win, even though Nonnie insists that Heavenly's beauty has faded.
Chance tells her that Princess's best friend is Sally Powers, a movie columnist, and that she will ensure that Heavenly wins and they can be together. "What you want to go back to is your clean, unashamed youth. And you can't," Nonnie says. She urges him to leave, before leaving the bar once and for all. After she goes, Chance takes out a pint of vodka and another pill. Suddenly, Fly comes in calling Chance's name, which causes a stir in the lobby.
Chance tells the piano player to play "his song," "It's a Big Wide Wonderful World," which he does. He sings the song, which makes people feel uneasy. When the song ends, he sits down at a table with some of his contemporaries: Bud and Scotty and Violet and Edna. When Miss Lucy enters, she comments on his return, as Bud and Scotty make fun of Chance's failures in Hollywood.
Scotty asks Chance if he knows about the "Youth for Tom Finley" rally that's happening upstairs that evening, and tells him that they recently castrated a black man at random to show that people mean business about protecting white women with segregation. They tell him that Boss is going to state his position on this case at the rally, and that Heavenly and Tom will be joining him on the platform. When Chance suggests that the anxiety around desegregation has everything to do with "sex-envy," the men sit back, snubbing him.
Chance talks about the fact that he does not believe Heavenly will stand on the platform with her father, as the Heckler listens in. Chance falls down, but the Heckler and Miss Lucy catch him. When his chair is righted, Chance takes another pill, which he calls a "goof-ball."
Miss Lucy asks Chance who he is staying with, but he does not want to name names. He intimates that she is a big star who has signed a contract with him. He then tells the group that has assembled that he is going to get Heavenly in a movie with him. They ask him the name of the film, and he tells them it's Youth. He insults the men's appearances, and they tell him that they have honest jobs and would bury their own mother if she died.
A group of men has assembled in the cocktail lounge, looking at Chance. Miss Lucy tries to encourage him to leave town, but he doesn't want to. Just then, a pageboy and Princess, in a disheveled get-up, enter. Everyone recognizes her and people begin to whisper as she goes outside to talk to Chance.
This scene, the second in the second act, introduces us to a whole new part of the play's world: a public world, in the cocktail lounge at the Royal Palms Hotel. For the first two settings in the play, we have been given a window onto two intensely private domains: a hotel room shared by a faded actress and her gigolo, and the private veranda of a local powerful politician who has been hounded by scandal over the last few years. Now, we meet the more marginal characters: the bartender at the local hotel and Boss's mistress, in a public world that reflects the society life of St. Cloud.
Aunt Nonnie and Chance's conversation pushes the play to a heightened, camp level, as he recalls getting honorable mention in the state drama competition after he forgot his lines, and making love to Heavenly in a vacant train car on the way home. The factors in this memory are campy and over-the-top in themselves: a failed drama competition, a bribe, virginity lost in a vacant train car, Aunt Nonnie as a conspirator. At times, the drama of Sweet Bird of Youth is so cartoonish as to approach the comical, and is made all the more ridiculous by the seriousness with which the characters are treating their circumstances.
Chance's humiliation at the state drama competition puts his obsession with Princess and his desire to become a star in perspective. Without the financial and social resources to win over a debutante like Heavenly's family, he sought stardom as a performer, hoping that that would grant him some kind of social mobility. When that failed, first at the drama competition and since then in his exploits in Hollywood, Chance has become intent on becoming a star in other ways. In his logic, becoming a star, using Alexandra Del Lago to amplify his career and gain notoriety in the entertainment field, is the only way to win back Heavenly, the woman he loves. The entertainment industry is the method through which interclass romance can occur within the play.
The racism of the South serves as a backdrop to the central action. Boss Finley is a virulent segregationist who believes that desegregation would make white women vulnerable to the dangerous advances of black men. A local, Scotty, tells Chance that a black man has been castrated as a symbol of the fact that segregationists are serious about keeping people separate. Chance suggests that the whole worry about interracial dating has everything to do with envy, a belief that further alienates him from his fellow St. Cloud residents. Thus, we see that an organizing principle in the white St. Cloud community where Chance grew up is their racist perspective.
It turns out that Chance and Princess not only share a fascination with fame and performance, but also with youth and the promise of youth. However, while Princess has come to terms with her faded youth and integrated it into her middle-aged despair and disillusionment, Chance clings to the memory of his youth and his desire to recreate it. He clings to the traumatic memory of losing Heavenly and becomes fixated on creating some kind of portal to their youthful affair. As Aunt Nonnie says to him, "What you want to go back to is your clean, unashamed youth. And you can't." This is a moment of clarity in the play, but it does not get through to the pill-popping boozehound Chance. Then, later, when his former classmates make fun of him for his fall from grace, he insists that he is going to star in a film with Heavenly called Youth. Chance has an unusual and limiting obsession with youth and its preservation, which leads him to his ruin.