Comedy is an inherently pleasurable phenomenon with beneficial psychological functions, but its potential to bring on undesirable and socially destabilizing consequences is less intuitively obvious. In this essay, I argue that one of the hitherto under-recognized features of William Shakespeare’s The Merchant of Venice is its covert problematization of the phenomenon of comedy itself, and that the play invites its audience to become more aware of in what situations laughter is constructive and appropriate. I apply psychological and cultural-historical theories of humor— specifically, Freudian relief theory and Bakhtinian thought on laughter and festivity—as a framework for interpreting the play, with a particular emphasis on the secondary protagonist called Gratiano. I argue that Gratiano serves as a personification of comedy, whose function is to problematize it and demonstrate its positive as well as negative attributes in relation to seriousness and restraint. Gratiano’s laughter-inducing antics compel audience members to sympathize with him in the dialectic which Shakespeare sets up between him and other characters, but the play also portrays his jovial behavior as concomitant with less desirable traits which his comedy successfully obscures. While the character presents comedy as attractive and instinctively preferable to propriety and decorum, he also shows how the allure of laughter and comedy may be used by disingenuous actors to provide an attractive veneer for immoral or abhorrent behavior.