The Lord and all the hosts of heaven are assembled. The three archangels, Raphael, Gabriel, and Michael, individually step forward and recite eloquent praises of the beauty and perfection of the universe and the omnipotence of God. Then Mephistopheles (also called Mephisto, the devil) enters. He cannot imitate the songs of the others, he says, for he lacks their skill. Furthermore, he has seen that the possession of reason and intelligence has made mankind unhappy, and this troubles him.
The Lord counters this criticism of humanity by citing the example of Faust, a man who is not debased by reason and who will ultimately be guided by it to a knowledge of the truth. God and Mephisto differ in evaluating Faust's potential. The devil censures Faust's present indecisive confusion, but the Lord excuses it by saying, "Men make mistakes as long as they strive." He asserts that Faust in the end will attain understanding and peace of mind.
The Lord and Mephisto make a wager to settle this dispute. As long as Faust lives, the devil may attempt to influence and conquer him, but if Mephisto's judgment of Faust is shown to be wrong, he will have to admit that "A good man with his groping intuitions! Still knows the path that is true and fit." Mephistopheles and the Lord are both confident of winning and the bargain is sealed. The heavens close, and the Lord and the archangels disappear.
The songs of the three archangels express Goethe's belief that the universe is a dynamic continuum where action is the law that dominates Nature and man. This doctrine will be illustrated in the story of Faust. In this system the only absolute sin is nonaction; man, despite many errors of judgment or wrong turns can find the path of righteousness, but only if he continues striving. He eventually will succeed if he keeps up the struggle because striving is itself a moral act and his intuitive yearnings all point toward a good end.
Mephisto represents the spirit of negativistic cynicism, of endless denial. He can be a force for good or evil — inducing a man to surrender to his lowest instincts and give up the quest, or driving him by persistent prodding and frustration to find the fulfillment of his ideals, i.e. salvation. The Lord is the paragon of perfection toward which men strive. He is unmoved by Mephisto's threats to Faust because He knows that man has an innate will for good, and that errors or backsliding are natural incidents in the human progression toward righteousness.
The conversation and bargain between God and Mephistopheles are reminiscent of a similar scene at the opening of the Book of Job. This Biblical connection is emphasized by Goethe's use of an archaic German style in this section. It creates an exalted and sacred background for the worldly tribulations of Faust and invites the reader to compare Goethe's conception of the universe, where man is free to err and strive, with that of Job, where he must blindly accept his fate.
The setting of the prologue to the poem in Heaven implies that the life and fate of Faust are matters of universal significance, which will clarify the relationship of God and man, good and evil, existence and nonexistence. Aside from this important purpose, the prologue presents another crucial question, which is symbolically expressed in Mephisto's wager — whether the Lord has been competent as a Creator and whether his creation, the world and its inhabitants, is worthy of survival.