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Not long after Mr. Touchett's death, Madame Merle arrives at the Touchetts' London home and discovers that the family is preparing to sell it. Mrs. Touchett tells Madame Merle how happy she is that her husband has left her financially secure; Merle is extremely jealous, though she keeps her feelings guarded. When she learns that Isabel has also inherited a fortune, she says that Isabel is very clever and hurries in to see her. Since Mr. Touchett's death, Isabel has spent a great deal of time thinking about her wealth and what it means; she has decided to be grateful for the freedom her money will afford her.
Isabel soon travels to Paris with Mrs. Touchett, but she finds her aunt's American friends there to be depressingly American. She encounters Henrietta, who is traveling happily with Mr. Bantling. Henrietta says that she disapproves of Isabel's new fortune—she thinks that it will allow Isabel to continue living in a world of dreams and ideals. Henrietta insists that Isabel should worry less about pleasing others and concentrate on facing hard truths about the world.
Mrs. Touchett offers Isabel the choice about whether to travel with her to Italy for the autumn, saying that, now that Isabel is rich, she may do as she pleases. Isabel, out of respect for social conventions, chooses to go to Italy with her aunt. On the way to Florence, they stop in San Remo, where Ralph is staying. Isabel and Ralph discuss her new fortune; Ralph admits that he knew about his father's decision to change his will before he died. Isabel worries that Henrietta is right and that the fortune will be bad for her. Ralph encourages her to embrace the things that happen to her and enjoy her new wealth. His advice reassures Isabel, and she begins to look forward to her trip to Italy, which seems like a great adventure. Thinking of Warburton and Caspar, she wonders if either of them will marry; she thinks that she would feel hurt if Caspar fell in love with another woman but that she would be glad if Warburton did.
Six months after Mr. Touchett's death, Gilbert Osmond meets his daughter Pansy and a group of nuns at his home near Florence; he discusses with the nuns the possibility that he might take Pansy away from their convent and bring her to live with him. He is joined by Madame Merle, who tells him about a beautiful twenty-three-year-old girl named Isabel Archer, who has inherited half the Touchett fortune. She promises to bring Isabel into Gilbert's orbit and says that she wants him to marry her. Gilbert says that Merle is a remarkable woman, but he has no interest in marrying. Merle insists, reminding him that he has no money of his own, and Isabel's fortune could provide a dowry for Pansy. As she watches Pansy playing outside, Merle notes dryly that the girl does not like her.
Not long thereafter, Merle arrives for a month-long visit at the Palazzo Crescentini, Mrs. Touchett's home in Florence. She fills Isabel's ears with flattering descriptions of Gilbert Osmond; eventually, Osmond pays a visit and invites Isabel to visit him at home and meet his daughter. During the visit, Isabel is strangely withdrawn; she is impressed with Osmond's refined manner, and he seems to catch her imagination. Isabel talks to Ralph about Osmond; Ralph says that he is indeed very refined but seems to have no other qualities. But he reminds her that she should judge people for herself.
They discuss Madame Merle, and Ralph tells Isabel that he dislikes the older woman's apparent perfection—she is too devoted to maintaining the impression that she has no flaws. Inwardly, he thinks that Isabel's friendship with Merle will not harm Isabel; one day, he thinks, Isabel will see through Merle and, in all likelihood, will lose interest in her.
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