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Delano attempts to speak to another sailor, who is tying a knot, and the sailor hands the knot off to Delano, telling him (in broken English) to untie it quickly. Delano, dumbfounded, doesn't do so, and the knot is taken away from him by a slave. The situation is extremely strange, but Delano tries again to simply ignore it.
Delano questions Cereno further and, when he mentions Cape Horn, Cereno responds, "Who spoke of Cape Horn?" When reminded that he himself did, Cereno seems very upset. Babo then informs Cereno it is time for his daily shave. Delano finds this, like everything else, very odd, but goes along with it. During the shaving, he admires Babo's attitude and skill at shaving. He then brings up Cape Horn again, and before Cereno can answer, Babo accidentally cuts Cereno's skin. At the sight of the blood, Cereno looks terrified. Delano decides that a man so terrified by the sight of blood cannot possibly be plotting murder. The hollow tone of the Spanish captain's responses again makes Delano suspicious, and he wonders whether the master and servant aren't acting out some sort of pre-arranged play before him.
Delano then has lunch with Cereno, and finds to his annoyance that Cereno will not dismiss Babo from the room so they can talk in private.
The wind returns, and Delano begins to pilot the San Dominick toward his own ship. Soon the two ships are anchored near one another, and Delano calls for a boat to be lowered from his boat with supplies for the San Dominick. The supplies are delivered, and Delano prepares to take his leave of the ship. Just as he gets into his boat, Cereno leaps over the side of the San Dominick and falls at the captain's feet. Babo also leaps over, and with a dagger as well; Delano's men stop Babo from attacking, however. Delano realizes that Babo intended to stab Cereno, not himself; and as the boat escapes, the canvas falls away from the figurehead, revealing a human skeleton above the words "follow your leader." Delano then sends his men to take the ship, which they manage with some losses to their number.
The rest of the story consists mostly of Cereno's court deposition, revealing the truth about what happened on the ship.
The slaves revolted, led by Babo and the giant Atufal, killing much of the Spanish crew and taking control of the ship. They then forced Cereno to sail toward Senegal, where they were to be released. But before they could make such a trip, it would require supplies. Babo would not let Cereno come to a port that would put the ship in view of people, so he chose to sail to the island of Santa Maria. He told Babo he was planning on getting supplies, but in actuality he hoped a passing vessel would save them. In the meantime, the slaves killed their owner and master, Alexandro Aranda, and hung his skeleton on the figurehead to serve as a warning to the other sailors. When the Bachelor's Delight came near, Babo gave Cereno a story to tell, as well as the other sailors, then set up the masquerade of himself as a servant to Cereno, so as to keep an eye on him. Cereno and all the sailors were threatened with instant death if they give anything away. Cereno struggled between wanting to tell Delano the truth and the constant threat of Babo. Finally, he leapt overboard into Delano's boat, thus ending the charade.
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