Officers enter the market place with their horde of Turkish slaves. Barabas appears and describes the new mansion that his recovered wealth has bought. However, Barabas is still bitter at the loss of his fortune and vows revenge on Ferneze. Lodowick enters looking for Barabas; the young man approaches the merchant because he wants to meet Abigail. Barabas knows what the governor's son is doing and decides to mislead him. Although the Jew professes to help the young suitor woo his daughter, Barabas tells the audience that he is doing so to exact revenge on Ferneze. The protagonist makes Lodowick feel uncomfortable by criticizing Ferneze's actions and making innuendoes about the chastity of nuns and friars. Barabas invites Lodowick back to his home, although he wishes to first buy a slave. Barabas rejects a young slave in favor of Ithamore, an older man from Arabia who will cost less to feed because he is "leaner." As Barabas leads Ithamore away and assures Lodowick to "be no stranger at my house," Mathias enters with his mother Katherine. Mathias is suspicious of what the Jew and his friend have been discussing. In an aside, Barabas informs us that although Abigail loves Mathias, Barabas will "frustrate" the couple's hopes to gain vengeance against the governor. Barabas approaches Mathias as his mother examines slaves, and Barabas assures Mathias that he was not talking about Abigail with Lodowick. While men pretend to discuss a book in order not to make Katherine suspicious, Barabas instructs Mathias to visit his home as soon as he can.
Barabas returns to Ithamore. He instructs the slave not to feel sympathy and to "smile when the Christians moan." Ithamore expresses his admiration for Barabas. The protagonist illustrates his pitilessness in dramatic fashion, stating, "I walk abroad a-nights / And kill sick people groaning under wells." The merchant describes his youth, how he learned "physic," and killed both "friend and enemy with my stratagems." In Charles V's wars against France. Ithamore explains how he razed Christian villages, slit the throats of Christian travelers, and maimed pilgrims in Jerusalem. Listening closely, Barabas recognizes a kindred spirit in the slave and exclaims, "we are villains both we hate Christians both." Barabas promises Ithamore that he will become wealthy, if Ithamore remains loyal to him. Lodowick arrives, and Barabas instructs Abigail to welcome him into their house and accept his offer of marriage. Abigail remonstrates that she loves Mathias not Lodowick, but her father remains unmoved and waits outside on the pretext of reading a letter from his agent.
Mathias appears, and Barabas explains that Lodowick has been trying to woo Abigail by sending her letters and jewelry. Mathias threatens to enter the house and fight his friend, but Barabas persuades him not to and so the young man stalks off. When Abigail and Lodowick appear, the protagonist tells the young man that Mathias has sworn his death. Once again, Barabas promises Lodowick his daughter's hand but tells Abigail that she must keep her heart for Mathias. Barabas cleverly reasons that it is not sinful to betray a Christian, since Christians believe that "[f]aith is not to be held with heretics." More deceit ensues as Mathias shows up again and Barabas persuades Lodowick not to exact immediate revenge. Both young men leave, and Abigail returns to the house. Barabas instructs Ithamore to deliver a forged letter proposing a duel from Lodowick to Mathias. Barabas leaves to convey a similar lie to Lodowick.
Much happens in this scene that prepares the way for later plots and intrigues. Ithamore is introduced as a wily character perfectly suited to admire his master's duplicity. Ironically, Barabas chooses the Arabian because he feels Ithamore would be easier to feed, a consideration that should be redundant given the protagonist's massive wealth. As always, Marlowe shows that the merchant is thinking about money. Barabas even regards the life of another human being as a business investment, (although this makes him no different from the other Maltese such as Katherine). Ithamore hates Christians and possesses a ruthless nature that Barabas recognizes may be put to his advantage. Although he is as merciless and immoral as Barabas, Ithamore lacks the careful planning instinct that renders Barabas's plans so successful. The slave seems more of a crude villain than his master, although both men delight in callous acts of violence. For example, while Barabas professes to have studied in Italy and thwarted the plans of both the German and French armies in his youth, Ithamore was a common cutthroat who murdered unsuspecting travelers at his inn. A master tactician, Barabas appears in absolute control of everyone around him. Mathias and Lodowick appear as hotheaded, if not foolish, youths in contrast with the coolly speculative Barabas. The protagonist sums up his philosophy of revenge when he entreats Ithamore to deliver his false letter to Mathias, stating "be not rash, but do it cunningly." Marlowe shows how the merchant is willing to wait to exact his revenge; patience is clearly one of Barabas's virtues aiding in his pursuit of vice.
If the foreground of this scene is taken up with the protagonist's reasoned machinations, then the background remains one of emotion and suppressed sensibilities. Abigail's feelings towards Mathias are downplayed by Barabas, who values vengeance over his daughter's felicity. Despite her promptings to stand by Mathias and reconcile him with Lodowick, Abigail displays a strong sense of duty as she does what Barabas instructs. Later, when Abigail discovers what Barabas has done, it becomes clear that her love for her father cannot override the disgust she feels for his crimes. However, at this stage Abigail seems cowed into submission; she accepts her father's authority, even at the expense of her and her lover's happiness. Every character seems driven forward by the momentum of Barabas's scheming.