Don Quixote’s lecture expressing the view the knights are superior to scholars continues. The audience is impressed with his articulateness, but no one agrees that chivalry is more admirable than scholarship. The captive starts to convey the story of his imprisonment, as well as his rescue in Moorish lands.
The captive informs the group that he left home several years earlier. He did so after his father broke up the family estate and told his three sons they must leave home and take up different occupations. One was told to be a soldier, while the other two were ordered to be a priest and sailor. He delivers a long account of the wars in which he has participated. The captive says that he fought alongside Ferdinand’s brother, Don Pedro de Aguilar.
The captive talks about his capture as well as his imprisonment in Algiers. He explains that one day he was on the prison’s roof when Zoraida, who had become infatuated with him from afar, dropped some money from a window for him. In addition to the money, she included a note saying that she had converted to Christianity and that explained she will give him financial assistance in order to escape, free her, marry her, and bring her to Spain. The captive used the money Zoraida gave him to ransom himself as well as a number of his fellow prisoners. He also bought a boat and arranged to free Zoraida from her father’s house.
The captive explains that he made his way into Zoraida’s father’s garden, found her, informed her of his plan to escape Algiers, and ultimately kidnapped her. Zoraida’s father woke up while the captive was in the process of doing this, so they took the father with him. They brought him on the ship and dropped him off in a location several miles away from the city. The captive and the people with him rowed for a number of days until they were robbed by French pirates. All of Zoraida’s riches are stolen. After they got to Spain, they decided baptize Zoraida and get married.
After the captive is finished telling his story, a judge called Licentiate Juan Perez de Viedma get to the inn. With him is Clara, his beautiful daughter. The captive recognizes that the judge, in fact, is his brother. The priest tests the judge to find out whether he still loves his brother, and is successful. The priest reunites the two men. That night, while everyone sleeps, a youth is heard singing a love ballad outside the inn. Cardenio goes into the women’s room to say they should listen.
Dorothea disturbs a sleeping Clara so she can enjoy the singing, explaining that it is the most beautiful she has ever heard. Clara says that the singing lord is really a young lord who once lived with his father in the house beside her and the judge. Clara explains that he has disguised himself and followed her because he loves her. While she and the young lord have never heard one another speak, she loves him and hopes to marry him. Dorothea says that she will try to make arrangements for Clara to speak to him.
In the meantime, Don Quixote stands outside the inn as a guard. The innkeeper’s daughter and Maritornes, her maid, trick him into passing his hand through a window. After tying his hand to a door, they abandon him. The man is left for the night on Rocicante’s back, standing in his stirrups. When four horsemen arrive at the inn, they mock Don Quixote as they try to enter the building.
Don Quixote makes a terrible noise, causing the innkeeper to come to find out what is going on. The horsemen are servants of Don Louis’s father. Don Louis is the young lord who is in love with Clara. When the four horsemen find Don Louis, they order him to accompany them home. He refuses. The judges privately asks Don Louis why he refuses to go home. In the meantime, two guests try to depart from the inn without paying, and the innkeeper gets into a fight with them. Don Quixote refrains from assisting the innkeeper, as he has sworn he will not take part in any new adventures until he has killed the giant who seized Dorothea’s kingdom.
Cervantes goes back to the conversation between the judge and Don Louis. Don Louis informs the judge of his love for Clara. He begs to be allowed to marry her, and the judge declares that he will think about the proposal. In the meantime, Don Quixote has used his eloquence to successfully convince the two guests to cease in their attack on the innkeeper. A barber, the very same one from whom Don Quixote earlier took a basin that he believed to be Mambrino’s helmet, appears at the inn. The barber sees Don Quixote and Sancho and accuses them of theft, but Sancho claims that Don Quixote took the basin as spoils of war after vanquishing the barber.
Instead of challenging Don Quixote and Sancho, the people at the inn play along with the idea that the basin is Mambrino’s helmet. A huge fight begins, but Don Quixote is finally able to end the brawl by getting the priest and the judge to help restore a sense of calm. The judge decides he will bring Don Louis to Andalusia together with him and Clara, and he informs the servants of his plan. A member of the Holy Brotherhood has been attracted to the scene by all the fighting. He realizes he has in his possession a warrant for the arrest of Don Quixote, for the freeing of the galley slaves. Don Quixote responds with laughter, railing at the foolishness of attempting the arrest of a knight-errant.