Sinclair spends the summer at the town in which his university is located. He passes his days with Demian, Eva and others in the garden near the river. He feels peaceful and relaxed, though this produces conflicting emotions in him—sometimes happiness, sometimes melancholy. However, at these times, he finds comfort in Frau Eva.
One day, Sinclair is overcome with dark feelings. He tries with all his might to summon Frau Eva. Soon, Demian comes running in and informs Sinclair that war with Russia is imminent. Demian takes this to be the sign of the coming of a new world. Sinclair learns that Demian is a Lieutenant and will likely soon go off to war.
Demian tells Sinclair that he must have called either himself or Frau Eva that day. Sinclair admits that he called Frau Eva. Demian reveals that Frau Eva had sent him. Sinclair is ecstatic that Frau Eva heard his call. Later, at dinner, Frau Eva assures Sinclair that any time he needs her, he can call her and she will send someone who is just like her.
War begins and Demian goes away. Soon after, Sinclair is sent into battle. One night, standing guard over a farm, Sinclair begins to enter a dream-like state. He recalls the images of Frau Eva and Demian. As he looks across the night, he sees Frau Eva in the sky, with the mark of Cain illuminated on her forehead. From her mark, stars spring forth and one of these stars hits Sinclair. Sinclair is later found wounded and unconscious on the battlefield.
Sinclair is taken care of, but, for the most part, is left to lie around in a state of semi-consciousness. He manages to muster all his energy to strive to get what he wills. Eventually, he is brought to a facility for wounded patients. In the bed next to him lies Max Demian. Demian asks Sinclair if he remembers Franz Kromer. They exchange a smile. Demian then tells him he must go now, but that at some point, Sinclair might need him again. When such an event happens, Sinclair must look deep into himself and he will realize that Demian is within him. He tells Sinclair to close his eyes and gives him a kiss from Frau Eva.
The deep swings in emotion to which Sinclair alludes at the beginning of this chapter recall earlier moments in the novel. Earlier, Sinclair often finds himself subject to mood swings—extremely happy at one moment, nearly suicidal at another. Here, however, the emotional shifts tie in with the broad theme: understanding and expressing one's true self. Just as the world is not simply noble and decent, man does not have only one type of emotion. Sinclair allows himself to express the full range of emotions natural to man. In having a full experience of being human and in truly expressing himself, then, he cannot suppress any of these emotions and is subject to a large variation in mood.
The many stars springing forth from Eva's forehead coincide with an enemy attack. The star that hits Sinclair is a bullet from this attack.
Hesse positions the war at the end of the novel in order to contrast Sinclair's development into a willful and independent human being with the horrors of the world, here a direct reference to World War I. By the end of the book, Sinclair has finally broken free. He is now prepared to face the challenges, and sometimes horrors, of the world. Additionally, he is now prepared to battle with those who would try to keep him and others to the old order of things, to a good Christian life. The war, then, is a metaphor for the struggle that Sinclair will face in the world as one who attempts to fully express all aspects, both good and evil, of his personality. That the book ends with the war unresolved indicates that it is not at all certain to what extent Sinclair will, or can, succeed in his struggle. (It is also likely that Hesse did not want to discuss the outcome of the war in Demian because he was writing this book in 1917, while World War I was still raging. He might not have wanted to resolve, in the book, an uncertainty that had not for him yet been resolved.)
In the final scene, Sinclair's initial yet unresolved discomfort with Demian is finally alleviated and he finally becomes his own man. He has always felt odd about the fact that Demian saved him from Kromer. Demian brings the incident up in such a way that it is like an old childhood memory, an episode that can now be forgotten. Sinclair is now fully independent. This is signified by Demian's telling him that he will no longer physically come to Sinclair. Rather, Sinclair carries within him now the means to take care of anything for which he usually would have needed Demian. He simply needs to look inside himself and use his own resources to solve whatever problems arise. Sinclair's transformation has been completed.