When Madame Merle confronts Isabel about her role in Lord Warburton's departure from Rome, Isabel is shocked by Merle's presumptuousness—she sounds as though she is speaking as Osmond's representative, and not merely as a distant acquaintance of the family. Propriety would dictate that the entire incident is none of Madame Merle's business, but Merle brazenly questions Isabel about it as though she, and not Isabel, was Osmond's wife. Isabel feels again that Madame Merle plays a powerful and sinister role in her life. Upset, Isabel asks Merle what role she is playing and what her relationship to Osmond is; Merle replies that it is "everything." Isabel gasps and covers her face in her hands; Merle sardonically congratulates her for taking the news so well. She realizes that Mrs. Touchett was right: Merle did orchestrate her marriage to Osmond so that the two of them could have access to her money. Merle leaves, and Isabel goes for a long drive, alone, thinking about what she has learned. She recognizes that Osmond married her only for her money. After some time, she comes to pity Madame Merle for having fallen under Osmond's sway.
Osmond sits in Madame Merle's parlor, listening to his former lover tell him what has happened with Isabel. Merle is deeply upset by the way she acted, and she tells Osmond that he has caused her soul to wither—she is unable even to cry. Osmond argues that the soul cannot be harmed, and she says that, on the contrary, it can. He tells her that all women have monstrous imaginations, as if they were all bad novelists. He says that he really only wanted Isabel to adore him, and since she does not, he is content with the adoration of Pansy. Merle says longingly that she wishes she had a child, and Osmond cuttingly replies that she can live vicariously through people who do have children. Merle says that after all that has happened, something still holds them together. Osmond thinks that it is the harm he could do her. Merle says that he is wrong: it is the good that she can do him. Osmond leaves. Merle thinks to herself that she has made herself a monster, all for nothing.
The Countess Gemini is obsessed with gossiping about the extramarital affairs of women in Florence, even though she is now in Rome. To give her something else to think about, Isabel often takes her driving through the streets of Rome. One day, she and the Countess are on an excursion with Pansy when Isabel sees Edward Rosier, back from his mysterious trip. Isabel speaks to him alone, and he tells her that he has been away to sell his collection of art objects; he has raised fifty thousand dollars and hopes he will now be allowed to marry Pansy. Isabel tells him that Osmond intends to marry Pansy to a nobleman. Pansy approaches, and Isabel moves to intercept her. The Countess goes to speak to Rosier, and after some time, Isabel sends the coachman to retrieve her. But the Countess sends him back, saying that she prefers to speak to Mr. Rosier and will return home in a cab.
A week later, Pansy shocks Isabel by saying that her father is sending her back to the convent; the nuns will arrive for her that very evening. Osmond tells Isabel that there is something he wants to give Pansy the space to think about "in the right way." Isabel is not sure what Osmond is trying to accomplish, but she is stunned that he would go so far, simply to have his own way. At dinner that night, the Countess says to her brother that she believes he has banished his daughter to remove her from the Countess's influence, for the Countess admits that she has taken the part of Edward Rosier. Osmond replies harshly that if that were the case, he would simply have banished the Countess and allowed Pansy to stay.
Mrs. Touchett writes Isabel that Ralph is near death and asks Isabel to come at once. When Isabel tells Osmond this news, he forbids her to leave Rome, saying that if she does so, it would simply be an act of revenge against him. Isabel realizes that he sees the entire situation as merely an elaborate game, and in his paranoia, he believes that all her actions are calculated either to help him or hurt him. She asks what would happen if she defied him. He refuses to discuss it. Isabel tells the Countess what has happened; the Countess urges her to defy Osmond and leave Rome. But Isabel is haunted by the memory of her wedding vows, which she does not wish to break. The Countess tells Isabel that Osmond has lied to her: his first wife did not die during childbirth, because she was never pregnant. Pansy's mother is Madame Merle. Madame Merle and Osmond have been lovers for years; Osmond's first wife died around the time Pansy was born, so they simply claimed that she had died in childbirth and put Pansy in a convent. Merle chose Isabel to marry Osmond both because Pansy needed a mother—she dislikes Merle, her real mother—and because Isabel has money for Pansy's dowry. Isabel realizes that this explains why Merle was so upset when she thought Isabel had encouraged Warburton not to marry Pansy.
Isabel asks why Merle and Osmond never married. The Countess says that Merle always hoped to marry above Osmond and worried that if she married Osmond, people would realize that she had a child out of wedlock. Isabel feels intense pity for Madame Merle. Isabel says sadly that she must see Ralph and prepares to leave for England.