Sancho and Don Quixote depart for Montesinos Cave with Basilio’s cousin. Basilio’s cousin is an author of parodies of great classical works. He is acting as a guide for the men. When the three men get to Montesinos’s Cave, Sancho and the guide use a rope to lower Don Quixote into the cave. After waiting for half an hour, they pull him up. He is asleep.
Don Quixote informs Sancho and Basilio’s cousin that when he entered the cave, he discovered s small nook and fell asleep in it. When he woke up, he found himself in a beautiful field. He was approached by an old man, who said that he was Montesinos and under a terrible enchantment. Montesinos said that he did cut out his cousin Durandarte’s heart when the man died. He brought the heart to Durandarte’s wife, Belerma, at the man’s request. However, he declares, Merlin has now put them all under the effect of a spell that is preventing them from leaving the cave. Durandarte lies down on the ground, occasionally sighing and speaking. Montesinos says that Merlin prophesied that Don Quixote would come. He also foresaw that the gentleman would be able to free them from their enchantments.
Don Quixote declares that he was in the cave for three days and three nights. He also says that he saw Dulcinea in an enchanted form. Sancho believes that Don Quixote is crazy. Don Quixote declares he understands that Sancho contradicts him only because he loves him. He says that Sancho will soon come to understand that his story is true, although it probably appears nonsensical to him now.
Cervantes declares that the translator discovered a note from Cide Hamete Benengeli in the manuscript’s margin, warning that he thought Don Quixote’s story was untrue and that he gentleman himself renounced it later on his deathbed.
Basilio’s cousin finds the adventures in the cave to be thrilling and says he will use them in his writing. When they’re back on the road, he, Sancho, and Don Quixote meet a man carrying a load of weapons who says he will tell him his story if they come to the inn where he is staying, to meet him. After this, they meet a youth making his way to war. The boy’s bravery is commended by Don Quixote.
While at the inn, Don Quixote sees the man with the weapons. The man conveys the story of two magistrates. They lost a donkey near his village, on a mountain. To get back his animal, the magistrates traveled about the mountain making braying noises like donkeys. While they were not able to find the donkey, they found their own ability to imitate donkeys very impressive. Villages nearby heard word of their strange antics. As a result, every time someone from the man’s village passes someone from another village, a braying noise is inevitably made. It is because of this that the two villages will be going to war.
A well-known puppeteer called Master Peter comes to the inn with an ape that whispers into Master Peter’s ear, telling them people’s fortunes. Sancho attempts to pay Master Peter to say what is wife is doing now. However, Master Peter falls dramatically to his knees, and the ape gives Don Quixote profuse praise. Don Quixote finds this flattering but believes Master Peter is part of a pact with the devil. He asks the ape whether his experiences in the cave were real or illusionary. The ape says that some parts of it were true but others false.
Master Peter stages a puppet show for Don Quixote. This show represents a knight’s travails. This knight travels to rescue his wife from a foreign land. Don Quixote begins to think that the show is real, and he attacks the entire set, destroying it. He explains that it is his enchanters that are responsible for his actions because they led him to believe that the puppets were real. Don Quixote gives Master Peter money for this trouble. He pays the innkeeper and treats the guests to a meal, as well.
Cervantes states that Cide Hamete Benengeli swears that Master Peter’s real identity is Gines de Pasamonte. Gines de Pasamonte was the galley slave whom Don Quixote freed near Sierra Morena earlier in the story. Benengeli then goes back to the narration. Don Quixote and Sancho meet with the army that has come from the village whose magistrates made braying noises like donkeys. Don Quixote tries to convince the men to refrain from attacking the other village. He declares that it is not possible for one man to insult a whole village. He almost persuades the villagers. Sancho then takes over. Sancho says that there is no reason to be ashamed of braying. He even starts braying himself. The villagers believe that Sancho is making fun of them, and they attack him, knocking him unconscious. Don Quixote flees. As the other villagers don’t show up to the battle, the braying village returns home feeling victorious.
Don Quixote reprimands Sancho for being so foolish as to bray to a group of villagers who are sensitive on the subject of braying. He says that he retreated only because knights should never act out of temerity. Sancho starts bringing up the topic of wages again. Don Quixote becomes so angry that he attempts to send Sancho away. Sancho apologizes.