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Sinclair recounts an episode in which he visits the house in which Demian used to live. The current owner can offer him no help in finding the Demian family, but does show him an old photo album containing a picture of Demian's mother. Sinclair recognizes her as the woman he has been drawing, the woman who has captured his imagination and who has been the subject of his dreams and desires. This photograph leads Sinclair on a failed journey to find Demian's mother before he begins his university study.
One evening, while walking around town, Sinclair overhears a familiar voice. He recognizes it at once as Demian's. Sinclair follows Demian and his companion until Demian drops his companion at home. Sinclair and Demian are then reunited. They walk and talk, sharing the ideas that bond them, speaking of "the herd instinct" that degrades humanity. Demian shows Sinclair to his current house and invites him to come to visit whenever he wants. Sinclair returns home, filled with emotion and excitement&mdahs;he will finally have the opportunity to meet Demian's mother.
The next day, Sinclair makes his way to Demian's house. As the maid shows Sinclair in, he recounts many of the significant events that have marked his life and his relationship with Demian. He meets Demian's mother, who recognizes him at once. They speak of the emotion Sinclair is now feeling and of the journey that has finally brought him to her—the picture Sinclair had mailed to Max, Sinclair's bar-hopping school days, and his interactions with Pistorius. Demian's mother invites Sinclair to be one of her very dearest friends and to call her 'Frau Eva.' Sinclair then goes out to a garden behind the house to see Max. Sinclair sings Eva's praises to Max. Pausing to think for a moment, Demian congratulates Sinclair, saying that he is the first person to whom Demian's mother has told her name during their first encounter.
The older Sinclair views this initial visit to the Demian household as a watershed event. Afterwards, he says, he freely went to and from the house "like a son or brother—but also someone in love."
Sinclair begins to center his life around the Demian household and around those who, like himself, "wear the sign in their faces." Many people pass through his circle, people of different interests and beliefs. Sinclair and Demian do not take seriously the religious beliefs of their acquaintances. Rather, they concern themselves with each individual's self-realization. Often, they discuss a premonition that the world cannot continue for much longer as it is, that society's ideals will be revealed as bankrupt because they will ultimately lead to war.
Amidst this environment of rogue thought, Sinclair's relationship with Eva grows stronger. She seems to understand his every thought and desire; she confronts Sinclair about his love for her and tells him that he must allow it to fully manifest itself in order to win her over. Sinclair spends two weeks at home over Christmas, allowing him time to think more about Frau Eva. Still, when he returns to her, he is not fully ready to make his move. A scene follows in which Sinclair finds Demian in the house passed out. He then wanders out into a storm and sees, in the clouds, the sparrow hawk that has played a central role in his dreams. He returns to Demian's house to find that he to has experienced an ominous sign in the form of a dream, though Demian refuses to reveal to him all of the details.
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