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Sancho is confused about the identity of the Squire of the Wood and the Knight of the Mirrors. Don Quixote tries to convince him that the Squire of the Wood is not Sancho’s neighbor but rather an enchantment, just as the Knight of the Wood is an enchantment that took the form of Sampson in an attempt to force Don Quixote’s mercy. Sancho, who knows that the supposed enchantment of Dulcinea was a deception, does not know what to think now.
On the road, Don Quixote and Sancho meet Don Diego de Miranda, a gentleman dressed all in green. Don Quixote introduces himself to Don Diego and tells him about the history that was written about his first adventures. Don Diego marvels that knights-errant still roam the land and is glad to hear about the book, which he thinks might correct all the nonsense written in books of chivalry. Don Diego describes his life. Sancho begins to think the man is a saint and kisses his foot. Don Diego tells Don Quixote about his son, who abandoned the sciences in favor of poetry. Don Quixote responds with an eloquent speech about the value of poetry, which he compares to a delicate maiden. As they talk, Sancho wanders over to some shepherds to beg for milk.
Don Quixote sees a cart coming toward him hung with the king’s flags, and he senses another adventure. He summons Sancho, who puts the curds he just bought from the shepherds into Don Quixote’s helmet. When Don Quixote puts on the helmet, the curds run down his face, and he thinks that his brain is melting. When he recognizes the curds in the helmet, he accuses Sancho of foul play, but Sancho replies that an enchanter must have put them there.
Don Quixote hails the cart. The mule driver tells him that the cart carries two lions for the king. Don Quixote challenges the lions, and despite everyone’s protests, he insists on having the cage opened. Cervantes interjects that Cide Hamete Benengeli extols Don Quixote’s bravery before continuing the narrative. The others run away and the lion tamer opens the cage. Don Quixote faces the lions with “childish bravado,” but the lion just stretches and lies down again. Don Quixote decides not to provoke the lions. He calls the others back, and the lion tamer recounts the story of Don Quixote’s valor. Don Quixote tells Sancho to give the mule driver and the lion tamer some money for their troubles and renames himself the Knight of the Lions. Don Quixote declares that he is not as insane as he may seem—that it is better for a knight to err on the side of courage than on the side of cowardice. Don Diego invites Don Quixote and Sancho to his home, and Don Quixote accepts.
Don Quixote receives a warm welcome at Don Diego’s home, where he meets Don Diego’s son, Don Lorenzo, and asks him about his poetry. Don Lorenzo answers him, all the while wondering to himself whether Don Quixote is mad. After discussing the merits of poetry, Don Lorenzo decides that Don Quixote is indeed a madman, but a brave one with a keen intelligence. Don Lorenzo recites some poetry for Don Quixote, who says it is the best that he has ever heard. Don Lorenzo is flattered despite his belief that Don Quixote is insane. Don Quixote stays with Don Diego for four days and then sets out in search of more adventures.
Don Quixote and Sancho meet some students and peasants on their way to the wedding of Quiteria the fair and Camacho the rich. The students tell Don Quixote about Quiteria and a man named Basilio who is in love with her. They say Quiteria is marrying Camacho only because of his wealth. In the course of the discussion, two of the students quarrel about the merits of studying swordplay and challenge each other to a duel in which Don Quixote acts as umpire. The more advanced student prevails, proving, according to the narrator, that skill always prevails over strength. The group arrives at the village in the middle of the night, but Don Quixote insists on sleeping outside the village in the fields.
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