It is 1632. An Old Woman and her son appear in front of the wagon on a summer morning, dragging a bag of bedding. They attempt to sell it to an unwilling Courage. Suddenly bells starting ringing, and voices from the rear announce Gustavus Adolphus's fall at the battle of Lützen. Peace has been declared. Courage curses: she has just purchased new supplies. Crawling out of the wagon, the Chaplain decides to don his pastor's coat.
Suddenly the Cook, bedraggled and penniless, arrives. Eilif is expected at any moment. Courage calls Kattrin from the wagon, but she has come to fear the light in the wake of her disfigurement. Courage and Cook sit and chat, flirting as they recount their respective ruin. The Chaplain emerges wearing his coat, and the Cook chastises him from urging Courage to buy new supplies. They begin to argue. As the Courage Model Book indicates, they are engaged in a "fight for the feedbag." When Courage defends the Cook, the Chaplain calls her a "hyena of the battlefield," a war profiteerer who has no respect for peace. Courage observes that the Chaplain has been living off her with little complaint and suggests they part company.
Upon the Cook's suggestion, Courage rushes off to town to sell as much as she can. The Cook removes his boots and the wrappings on his feet. Poignantly, the priest begs the Cook not to oust him. Suddenly an older, fatter, and heavily powdered Yvette enters with a servant in tow. The widow of a colonel, she has come to visit Courage. When she sees the Cook, she unmasks him as the Peter Piper that abandoned her years ago, warning Courage of his history. Courage calms her and takes her to town.
Both men are now convinced that they are lost. They reminisce about happier days under the service of the Commander. Eilif, now a richly dressed lieutenant, then enters in fetters followed by two soldiers. He has come to see his mother for the last time. He has been arrested for another of his acts of plundering, now criminal under the new peace, one that left the wife of a peasant dead. He has no message for his mother. The soldiers take him away and the Chaplain follows, instructing the Cook to defer telling Courage for now.
Uneasily, the Cook approaches the wagon, asking Kattrin for food. A cannon thunders. Courage appears, breathless, with her goods in arms. The war resumed three days ago. They must flee with the wagon; she wants the Cook to join her and takes hope that she will be seeing Eilif soon. With the Cook and Kattrin in the harness, Courage sings triumphantly: "Report today to your headquarters! If it's to last, this war needs you!"
With the onset of peace, this scene ironically shows the characters—all of whom have built their lives around the war—in ruin. Courage will lose everything on her wasted supplies. Eilif is punished for the murderous acts that gained him accolades during the war, and the absurdity of the situation leaves him speechless. The Chaplain finds himself ousted by the Cook. Though at first he turns upon Mother Courage, hypocritically attacking her scavenger's investment in the war, he must ultimately beg the Cook to leave him his place in the wagon. Notably, he cannot return to the cloth and all its attendant beliefs even if new congregations undoubtedly await him. His time as a tramp has made him a better man. Brecht underlines this transformation as revealing the "dignity of misery." Though triumphing over the Chaplain, the Cook, an aging Don Juan, must beg for food and is humiliated by his old lover. Notably, the Cook and Courage stage their courtship through the discussion of the ruin that defines their new lives.