Hieronimo begins building the stage for the play. The Duke of Castile walks by and asks him why he is building the stage by himself (literally, he asks where are his helpers). Hieronimo replies that it is important for the author of a play to ensure all aspects of its performance run smoothly. Hieronimo then asks Castile to give the king a copy of the play and to throw a key onto the floor for him when the audience has been seated. Castile consents and leaves. Balthazar comes along, with his beard half-on and half in his hand. Hieronimo scolds him for being unprepared. Then, along again, Hieronimo reminds himself of the reasons for his revenge: the death of his son and the recent suicide of his wife. He again resolves aloud to get revenge.
The time has arrived for the wedding festivities. The King, the Viceroy, the Duke of Castile, and their entourage sit down in front of the stage. The King hands the Viceroy the night's program, which summarizes the play's plot. Then, the play begins.
In the text of The Spanish Tragedy, a note is included to any readers (or perhaps audience members) explaining that the play was transcribed in English for the benefit of the general public; so the characters are comprehensible to English-speakers, despite Hieronimo's instructions to the contrary. Balthazar opens the production by entering—along with Hieronimo and Bel- Imperia—and giving a speech in the character of Soliman (the Turkish emperor), describing his pleasure at the conquest of Rhodes and his love for the beautiful Perseda. The king praises Balthazar's acting, and both the Viceroy and Castile note that he draws on his real-life love for Bel-Imperia. Hieronimo and Bel-Imperia, meanwhile, act the parts of the bashaw and Perseda. Soliman professes his affection for his friend Erasto, but when Lorenzo enters in the part of the knight Erasto, Erasto and Perseda exchange professions of love to Soliman's dismay. Hieronimo then persuades Soliman to have Erasto killed, against Soliman's initial reluctance to kill a friend. He then stabs Erasto. When Soliman tells the grieving Perseda that she can have his love to replace the loss of Erasto, she angrily rejects him, stabs him, and then stabs herself.
The watching nobles are all extremely impressed by the play. The King congratulates Hieronimo, and the Viceroy remarks that Bel-Imperia would have treated his son better had the play been reality. But then Hieronimo goes on to provide his promised conclusion, revealing that the murders that were just enacted were in fact committed, the stabbings were real, and all the other actors are now, in fact, dead. Hieronimo graphically provides the reason for his revenge by revealing his dead son's body from behind a curtain where it has been hidden. He describes the cruel murder of his own son and then directly addresses the Viceroy whose own son Hieronimo has just killed, telling the Portuguese ruler that he understands his grief, having felt it himself. He reveals that he constructed the play specifically as a device of revenging himself on the murderers of his son and also notes that he rewrote Bel-Imperia's part so that she would not have to die at the end but that she decided to take her life anyways, out of despair for the loss of Horatio.
Hieronimo then runs off to hang himself, but the King, Viceroy and Castile, now enraged and confused by the sudden disaster, manage to find him and stop him. Hieronimo curses them, as they angrily demand his reasons for killing the Viceroy's son and Castile's children. Hieronimo repeats the fact (previously explained) that Lorenzo and Balthazar killed his son. The Viceroy realizes that Bel-Imperia must have been Hieronimo's accomplice, since she stabbed Balthazar. The king then berates Hieronimo for not speaking (even though he has already told the king everything he needs to know), at which point Hieronimo vows silence, perhaps intending to never reveal (though the Viceroy has already guessed it) the fact that Bel-Imperia helped him. He then bites out his tongue. The King, Viceroy and Castile are disgusted as the tongue plops to the floor. They then insist that Hieronimo write down his confession (though he has already spoken it), and Hieronimo then asks, using signs, for a knife with which to sharpen his pen. They provide him with one, allowing Hieronimo to immediately stab the Duke and then himself. The king, surrounded by the bodies of the dead, realizes and laments the fact that the heirs to the Spanish monarchy have been destroyed. The Viceroy echoes his grief, voicing a desire to sail across the world weeping for his dead son.
This scene is both ingenious and problematic. The ingeniousness lies in the way Kyd constructs the ironic deaths of Balthazar and Lorenzo. Believing that they are acting out a play to celebrate a wedding—a new beginning to life—they in fact act out their own, very real deaths. In a piece of grim wordplay, the "plot" Hieronimo spoke of in IV.i becomes the plot of the play. And the plot results in Hieronimo's long-awaited revenge.