Cervantes states that Cide Hamete Benengeli blesses Allah before starting his account of Don Quixote and Sancho’s story of being once again on the road. He asks us to cast aside thoughts of past adventures and focus exclusively on what is to come. Sancho and Don Quixote believe it is a positive sign that Dapple whinnies more loudly than Rocinante does. Cervantes interrupts to declare that Benengeli’s history fails to indicate whether Sancho bases his belief on astrology.
Don Quixote decides to head to El Toboso, as he hopes to visit Dulcinea. While on the road, he and Sancho talk about the significance of fame. Don Quixote declares that people value fame even when it is negative in nature. Sancho states his belief that they ought to try to become saints instead of knights, as saints always go to heaven. His master argues that there are already enough saints in the world. He believes that his destiny is to be a knight-errant.
Sancho and his master decide they will enter El Toboso at night. Sancho is alarmed because he doesn’t know which house Dulcinea resides in. This is because he was supposed to have visited her to hand her the letter from Don Quixote in the First Part. The two men come across a ploughman who says he is not aware of there being any princesses in the area. Don Quixote and Sancho head outside the town to rest.
Cervantes declares that the author, who is said to be Cide Hamete Benengeli, hoped to skip the chapter because of his anxiety that readers would not believe him. However, he wrote it anyway. Don Quixote sends Sancho to get Dulcinea and bring the woman to him. Sancho panics as he has never laid eyes on Dulcinea and is worried he will be attacked if anyone witnesses him walking around the town looking for women.
Sancho sits down and thinks things out. He decides that he can fool his master by kidnapping the first peasant girl he happens to see on the road and presenting her to Don Quixote as Dulcinea. Sancho comes upon three peasant girls. Cervantes states that the author fails to say whether the girls are riding on donkeys or horses. Sancho goes to Don Quixote and lets him know that Dulcinea is coming with two maids on horseback. However, Don Quixote sees only three peasants on donkeys.
The girls ride by, but Sancho grabs one of them. He falls down on his knees, praising her and calling her Dulcinea. While he is disgusted by her appearance and smell, Don Quixote believes that she is indeed Dulcinea. He declares that a wicked enchanter who wishes to take away the pleasure of admiring Dulcinea’s beauty has transformed her into a peasant. Sancho gives Don Quixote a description of Dulcinea as he says he saw her. He includes a mole with several hairs growing out of it.
While on the road, Don Quixote and Sancho see a wagon full of actors in costume. Don Quixote stops to talk to them, but Rocinante is frightened by one of the costumes. Don Quixote is thrown to the ground by his horse. Imitating Don Quixote’s antics, one of the actors steals Dapple and reenacts the scene. Don Quixote gets back on his horse and rides it to the wagon to avenge himself. However, he stops short when he realizes the whole company is lined up on the road and that they are armed with rocks. Sancho convinces his master out of attacking the group. He points out the fact that the actors are not knights and that Dapple has been given back unharmed.
Don Quixote and Sancho sleep in a grove. They meet a knight who says he is pining away for Casildea de Vandalia, his mistress, to whom he reads poetry. The narrator refers to him as the Knight of the Wood and his squire as Squire of the Wood. The Squire of the Wood and Sancho walk off to have a talk. Don Quixote and the Knight of the Wood stay where they are to have their own conversation.
The Squire of the Wood and Sancho eat and drink as they talk about the fact that both of them expect their masters to make them governors of islands. They also talk about their children. Sancho laments his master’s madness but declares that he is pure and honest. The Squire of the Wood reveals that the Knight of the wood is a bit of a rogue. Sancho claims to be an experienced taster of wines. The two men drink a great deal. They eventually pass out while the flasks in their hands.
In the meantime, Don Quixote and the Knight of the Wood talk about their adventures as knights. The Knight of the Wood informs Don Quixote that his lady has made him go into the world to force all knights to proclaim her beauty. He explains that his most significant conquest was the defeat of Don Quixote de la Mancha. Don Quixote says that this is impossible and challenges the Knight of the Wood to a duel. The Knight of the Wood accepts the challenge but explains they must wait until the morning. They go to the Squire of the Wood and Sancho, and these men talk about whether they should fight, too.
When dawn arrives, Sancho sees the nose on the face of the Squire of the Wood and is so alarmed by its size that he climbs up a tree before the duel can start. The Knight of the Wood is dressed in beautiful shiny material, and this causes him to be renamed the Knight of the Mirrors. However, he will not allow Don Quixote to see his face. Don Quixote takes a moment to assist Sancho into the tree. This interferes with the duel’s timing. A result is that the Knight of the Mirrors is unable to make his horse go fast enough again. This makes it easy for Don Quixote to knock him off. Don Quixote takes off the Knight of the Mirror’s visor. He finds that the Knight of the Mirror’s true identity is that of Sampson Carrasco. Don Quixote believes that he is still under an enchantment, and that it is not Sampson who he sees before him. The Squire of the Wood takes off his nose made of pasteboard and shows himself to be Sancho’s neighbor, Thomas Cecial. Sampson talks of Dulcinea’s beauty, and Don Quixote allows him to live.
Sampson lets it be known that he, the priest, and the barber have been plotting to defeat Don Quixote and force him to go home for two years. Samson’s squire departs, but Samson vows to avenge himself on Don Quixote.