Part III begins with a description of "practical" people and the constant lack of such people. The narrator asserts that the definition of a practical man is one who lacks originality or initiative. As a result, in Russia it is much more prestigious to be a general than an inventor or genius, for being a general is sign of a stable and quiet life. The Yepanchins, however, are not an example of an ordinary family, perhaps due to the eccentricity of Lizaveta Prokofyevna, Madame Yepanchin.
Madame Yepanchin has always known of her eccentricity and has felt somewhat self-conscious about it, even though society has always highly respected her just like General Yepanchin. Lizaveta Prokofyevna constantly suffers anxiety regarding the marriage of her three daughters, and she frequently becomes irritable and experiences mood swings as a result. Recently some of her anxiety has subsided in light of the prospective marriages of Adelaida to Prince S. and Aglaya to Radomsky.
In the past few days, however, the Yepanchin household has once again been in turmoil. Aglaya has been hysterical for three days. Madame Yepanchin received an anonymous letter stating that Aglaya was in correspondence with Nastassya Filippovna. Now Madame Yepanchin regrets that she dragged Prince Myshkin to their house and spoke to him about it.
Madame Yepanchin, Myshkin, the three Yepanchin sisters, Prince S., and Radomsky are all sitting on the Yepanchin veranda. Prince S. jokingly criticizes Russian liberalism, which seems to attack Russia itself rather than order. Myshkin takes Prince S. very seriously and replies with his opinion on the perversion of the morals in young people. Radomsky then notices an inconsistency in Myshkin's line of argument: how can Myshkin not have noticed in Burdovsky and his group the same moral perversion of which he complains now?
Kolya enters and says that Hippolite has moved into Lebedev's cottage. Kolya also says that yesterday Hippolite kissed Myshkin's hand. Everyone decides to go to the park. Before they do, Myshkin begins to apologize to Radomsky for making great ideas sound ridiculous. Suddenly Aglaya exclaims that Myshkin is better than anyone else present and that he should not apologize to anyone. Kolya cries "poor knight," hinting at Aglaya's interest in Myshkin. Aglaya cries that she will never marry Myshkin, who replies that he had no intention of asking her. Suddenly everyone starts laughing, and they all go to the park.
As they are walking though the park, they see three women surrounded by a group of admirers walking loudly toward them and attracting attention. Myshkin is filled with horror as he notices Nastassya Filippovna. She approaches Radomsky and begins to speak with him as if she knows him. Radomsky's friend makes an insulting remark toward her, so she takes a quirt and whips him across the face. The officer friend is about to attack Nastassya Filippovna, but Myshkin prevents him.
Back at the Yepanchins, Madame Yepanchin is convinced that Radomsky is in fact in close relations with Nastassya Filippovna. Myshkin sits by himself on the veranda, where Aglaya soon joins him. She proceeds to tell him about dueling pistols and how such pistols are prepared for a duel. Myshkin walks out with General Yepanchin, who tells him that Nastassya Filippovna's comments to Radomsky earlier in the park had partially proven true. Radomsky's uncle shot himself and there is indeed a rumor of state money missing. Radomsky's own fortune is unaffected, but everyone is shocked. The General also reveals that, according to his two elder daughters, Radomsky proposed to Aglaya a month ago and she refused him. Aglaya has also told her family that Nastassya Filippovna is determined to marry her to the Prince.
When Myshkin is left alone in the park, he reads a note Aglaya gave him earlier, in which she invites him to meet her on a park bench at seven o'clock the next morning. Keller comes up to Myshkin and offers his services as a second in case the prince is involved in a duel. Myshkin laughs in response, realizing the reason for Aglaya's strange talk on dueling earlier. Suddenly Rogozhin meets Myshkin in the park, saying that Nastassya Filippovna wishes to see the prince. Rogozhin also tells Myshkin that she is convinced the prince is in love with Aglaya and that she wishes to see them married.
Part III begins in the same removed tone as Part II, though this time the narrator moves from the general to the specific much more quickly. The discussion of practical people quickly gives way to a discussion of specific characters, namely the Yepanchin household. Lizaveta Prokofyevna is most distressed that her daughters are not married; she is particularly worried about Aglaya, who is childish and impetuous and does as she likes—much like Madame Yepanchin herself. This introduction to Aglaya's character from her mother's perspective paves the way for the movement of Aglaya onto the center stage of the novel's action.
The setting of Part III is still primarily Pavlovsk, but moves from Lebedev's cottage to the Yepanchins' residence and the park. Once again, unlike the St. Petersburg in Parts I and II, in which the weather is humid and the air is stuffy, Pavlovsk is a place of open space where one can appreciate the beauty of nature.
When the Yepanchins, Myshkin, Prince S., and Radomsky are seated on the Yepanchin veranda, Radomsky begins to speak of Russian liberalism. Radomsky is a handsome, intelligent young man who frequently speaks in a mocking tone. Myshkin naïvely thinks Radomsky is serious and replies to him in a very grave tone. Radomsky is slightly taken aback, particularly when Myshkin's argument rests on the observation of moral perversion. Radomsky asks how it is possible that the prince did not react more strongly towards Burdovsky and his group, who showed clear signs of moral perversion. Radomsky thought that Myshkin simply lacked the moral and intellectual sensibility to recognize this deception. The prince's comment, however, convinces Radomsky otherwise. The question remains unanswered, however, as Myshkin does not resolve the contradiction in his views and actions. Prince S. remarks that Myshkin is naïve in his belief that it is easy to achieve a paradise on earth. Indeed, this phrase characterizes Myshkin's optimism and belief that he can use compassion to save others from destruction.
We also see Myshkin's naïveté in the episode involving Aglaya. After she passionately says that the prince is better than anyone else she knows, Kolya mocks her, and she announces that she does not want to marry him. In order to calm Aglaya, Myshkin replies that he never had any intention of marrying her in the first place. He thinks he is saying what she wants to hear, but in reality he is refusing her advances, which is unpleasant for her. Aglaya exits the awkwardness of the situation through laughter, in which Myshkin and then the others readily join. They seem to forget momentarily the hints that Aglaya does in fact feel something very special toward the prince. Soon, however, the hints that there is something going on being Myshkin and Aglaya resurface. The prince is utterly oblivious that he may be in love with Aglaya or that she may return the feeling. For him, love is unexplainable and impossible to define. Analogously, for him religion is simply pure joy—the feeling of God's delight in his children and his creation. Love, too, is simply the joy that Myshkin feels when he is with Aglaya. On the other hand, the feeling Nastassya Filippovna evokes in him is one of pity and horror. Myshkin is horrified at the thought that she will in fact give free reign to the force of self-destruction within herself.