The third narrative of this section is by Franklin Blake, and it begins when he was called back from his travels in the East in the spring of 1849 with the news that his father had died and that he was heir to his father's fortune. Franklin confirms the thought from Betteredge's narrative that he was heartsick at Rachel's treatment and thus had left England. On arriving back in England, Franklin feels for Rachel as much as ever and finds that she is living under the care of her aunt, Mrs. Merridew. Franklin goes to see Rachel, but she declines to see him. Franklin and Bruff are as puzzled as ever at Rachel's cold behavior. Franklin resolves to take up the case of the Moonstone, in hopes of discovering the secret of her feelings. He leaves at once for the Verinder house in Yorkshire and is approaching Betteredge by sunset.
Betteredge invites Franklin in, but Franklin refuses his invitation, explaining that he doesn't want to enter Rachel's own house against her will. Betteredge is confused and distressed to hear that Rachel is still not speaking to Franklin. But Betteredge refers Franklin to a spare room for rent at Hotherstone Farm, near the Verinder house. As they walk toward Hotherstone Farm, Betteredge asks Franklin the reason for his visit. Franklin announces his intention to recommence the Moonstone investigation in order to win Rachel back. Betteredge informs him that he may begin by fetching the letter addressed to him from Rosanna Spearman, which Limping Lucy Yolland holds. Franklin wants to go to Cobb's Hole tonight, but Betteredge tells him it is too late. They agree to go early in the morning.
Franklin picks up Betteredge, who has lapsed into "detective fever" again, in the morning on the way to Cobb's Hole. At the Yolland's house, Lucy hears Franklin's name with contempt and gets Rosanna's letter for him. She beckons Franklin outside and stands looking at him with disgust, saying, "I can't find out what she saw in his face Oh, my lost darling! what could you see in this man?" Lucy asks Franklin if he is not remorseful. He is confused and says no. She thrusts the letter at him and leaves.
Franklin opens the envelope and finds a letter and a slip of paper from Rosanna directing him to follow the directions in the letter for an explanation of Rosanna's curious behavior toward him. The letter contains directions to a hiding place in the Shivering Sands.
Franklin and Betteredge go to the Shivering Sands and wait for the tide to turn. When it does, Betteredge leaves Franklin to explore the hiding place alone. Franklin finds the tin case, held in the quicksand by chains. Inside is a linen nightgown and a letter. Franklin pockets the letter and examines the nightgown, which has a smear of paint on it. He remembers Cuff's statement that the owner of the stained nightgown was also the diamond thief. Inside the nightgown is the name of the owner: Franklin Blake—"I had discovered Myself as the Thief."
Franklin is shocked, having no knowledge of having taken the diamond. Betteredge takes Franklin home. Franklin begins to read Rosanna's letter out loud.