Meeting for dinner, Jerry is once again face to face with Dale. Matchmaker Madge encourages them to dance together. The theme of mistaken-identities is played to the fullest:

Madge: You've robbed me of the pleasure of introducing you two. You've already met.
Jerry: Oh yes we've met. Last spring.
Madge: Well I hope you see a lot of each other. (She winks at Dale).
Jerry: You know, Madge is a most understanding person. She seems to know instinctively the kind of girl that interests me. I don't know what I'd do without her.
Madge (mischeviously): Aw, that's sweet of you darling. But you two run along and dance and don't give me another thought.
Dale: That's what I'm afraid of. (While dancing) I think Madge is a very brave person.
Jerry: Yes, I have a tremendous admiration for her.
Dale (amazed and confused): Well, if Madge doesn't care, I certainly don't.
Jerry: Neither do I. All I know is that it's Heaven, I'm in Heaven.

Jerry breaks into song mid-sentence, and their dance together is probably their most memorable dance of all time - and probably their most famous romantic duet as well - "Cheek to Cheek":

Heaven, I'm in Heaven.
And my heart beats so that I can hardly speak.
And I seem to find the happiness I seek.
When we're out together dancing, Cheek to Cheek...

First, they dance in the company of others on a crowded dance floor and then dance/drift across a bridge to a deserted, circular ballroom area and all alone in a dreamlike setting perform a romantic dance together. Dale's gown, ice-blue satin covered with ostrich feathers, sheds as they whirl around. [This gown was the most famous of all Rogers' dance dresses - the shedding of the feathers in this scene was the source of the rumored hostility and rivalry between the two dancers.]

Beautifully, they stretch out an arm to each other (his left, her right), leading to her twirling spin into him. Briefly, they repeat their earlier tap-dancing routine from the bandstand, performing side by side. Several times she bends deeply backwards in his arms during their choreographed dance, surrending to his seductive, luring attraction. Mixed with standard ballroom dance positions, they also leap and turn boldly, separate, spin, and then return "cheek to cheek." After a climactic ending with a full orchestral burst, the dance ends as they come to rest against a terrace wall - as if they have just made love. They affectionately gaze at each other, while Jerry slowly twiddles his thumbs.

Obviously in love, but remembering who she is dancing with, Dale is perplexed because she has fallen in love with a man she believes is the husband of her best friend. There appears to be no possibility for their relationship to work out and her common sense reasserts itself. On a balcony, Jerry proposes to her, causing her to express her frustration:

Dale: I'm afraid I haven't been quite fair with you. You see, I know who you are.
Jerry: What difference does that make?
Dale: Oh, so that doesn't make any difference?
Jerry: No. Why should it? I don't know who you are. And I don't care.
Dale: Well, that's big of you. Well...
Jerry: Well what?
Dale: Aren't you now supposed to say, 'We should think only of what we mean to each other. That we're entitled to live our own lives.'
Jerry: I don't think I'd say it that way exactly. Well, aren't we?
Dale: Go on.
Jerry: If it weren't for a promise I made in a moment of weakness, I would go on.
Dale: Oh, you made a promise. Well, that shouldn't make much difference to you.
Jerry: That's right. Forget it. Marry me.
Dale: How could I have fallen in love with anyone as low as you?

She slaps him a second time and stomps off. He interprets her reaction toward him:

She loves me.

Under the circumstances, Dale believes she must leave. But Madge advises her: "Here or there. As long as you remain a spinster, you're fair game for any philandering male. You know, uh, what you should really have is a husband you can call your own. Seriously, I mean it." But then, there is another way out from her dilemma. "All mixed up," she impulsively decides to marry her preening dress designer Alberto Beddini after he proposes and suggests: "Why not? I'm rich and I'm pretty, and then Mr. Hardwick will leave you alone." Eavesdropping Bates hears their plan and follows them.

Soon, Jerry finds out that Dale has married Beddini, and that Dale has been "mistaking me for Horace all this time." He decides to break up her marriage before it is truly consummated:

All is fair in love and war, and this is revolution!

When the newly-married couple move into Horace's/Jerry's bridal suite and Jerry and Horace are told they must vacate, Jerry insists that the room is his, and he produces his room key to prove it. Beddini angrily threatens if Jerry returns: "If he returns, I will keel heem." He also proclaims a motto from the House of Beddini, and brandishes a fencing foil:

For thee woman thee keess
For thee man, thee sword.

[The lines, changed after censorship from the Hays Office, originally read: 'For the man the sword, for the woman the whip.']

Then, Jerry tap dances in the room above the bridal suite to disturb Beddini. When Beddini leaves the suite to challenge Jerry, Jerry sneaks down to find Dale alone in the bridal suite and persuades her to take a gondola ride with him, so that he can explain to her the complicated mess of mistaken identities and bring reconciliation. Dale is contrite, but upset because she believes she is now locked into a marriage to Beddini. When Bates reports that Jerry has kidnapped Dale, and they are drifting out to sea in a gondola, Horace, Madge, and Beddini pursue them in a motorboat, but while giving chase, they run out of petrol (deliberately removed by Bates so that they will be stranded.)

At the hotel that evening, Jerry and Dale share a champagne dinner together, with Jerry taking the place of Dale's groom:

Dale: I still feel a little guilty being here with you while Alberto's out looking for us.
Jerry: Come on. Let's eat, drink, and be merry, for tomorrow, we have to face them.

They watch a brief parade of white gondolas on the water while dining. The gondolas are followed by a troupe of dancing chorus singers, performing "The Piccolino." The production number, filmed in one take, is composed of staged ballroom routines, sometimes top-photographed to provide patterned images reminiscent of Busby Berkeley films. The camera returns to their table, where Dale sings the song's lyrics to Jerry. Part of "The Piccolino" dance uses the waist-sashes of the dancers as props. [Note: 'The Piccolino' is similar to both The Gay Divorcee's 'The Continental' and Flying Down to Rio's 'Carioca.']

Photographed at first from the waist down, Dale and Jerry bound down the steps, and skip to the dance floor, becoming the centerpiece of a two-minute dance, filmed in one take. Following their dance, they move sideways back to their table, drop into their chairs, raise their champagne glasses and clink them together in a silent toast to each other.

The conclusion of the film, a final confrontation in the bridal suite, untangles the complications of the plot. It is revealed that Beddini and Dale have had an illegal marriage - they were married by Horace's disguised "invaluable manservant" Bates who posed as a clergyman. Jerry asks Beddini a pointed question in the final dialogue of the film:

Well, well, well, Mr. Beddini, what are you doing in this young lady's room?

Jerry and Dale finally have their own chance at romance. The couple, dressed for going out on the town, conclude the film by stepping down from a footbridge and performing a duet - a short reprise of "The Piccolino." Then, they whirl away to the right of the frame into the distance as the film fades to black.