Soon it is Geatland’s turn to face terror. A great dragon lurks beneath the earth, jealously guarding its treasure, until one day a thief manages to infiltrate the barrow, or mound, where the treasure lies. The thief steals a gem-covered goblet, arousing the wrath of the dragon. The intruder, a slave on the run from a hard-handed master, intends no harm by his theft and flees in a panic with the goblet.

The poet relates that many centuries earlier, the last survivor of an ancient race buried the treasure in the barrow when he realized that the treasure would be of no use to him because he, like his ancestors, was destined to die. He carefully buried the precious objects, lamenting all the while his lonely state. The defeat of his people had left the treasures to deteriorate. The dragon chanced upon the hoard and has been guarding it for the past three hundred years.

Waking up to find the goblet stolen, the dragon bursts forth from the barrow to hunt the thief, scorching the earth as it travels. Not finding the offender, the dragon goes on a rampage, breathing fire and incinerating homes and villages. It begins to emerge nightly from its barrow to torment the countryside, still seething with rage at the theft.

Soon, Beowulf’s own throne-hall becomes the target of the dragon’s fiery breath, and it is burned to the ground. Now an old king, Beowulf grieves and wonders what he might have done to deserve such punishment from God. He begins to plot his revenge. He commissions a mighty shield from the iron-smith, one that he hopes will stand up against the breath of flame. He is too proud to assemble a huge army for the fight, and, remembering how he defeated Grendel single-handedly in his youth, feels no fear of the dragon.

The poet recounts the death of King Hygelac in combat in Friesland. Hygelac fell while Beowulf survived thanks to his great strength and swimming ability. Upon returning home, Beowulf was offered the throne by the widowed Hygd, who knew that her own son was too young and inexperienced to be an effective ruler. Beowulf declined, however, not wanting to disturb the order of succession. Instead, he acted as protector and guardian to the prince and supported his rule. Only when Hygelac’s son met his end in a skirmish against the Swedes did Beowulf ascend the throne. Under Beowulf’s reign, the feuding with Sweden eventually ceased when Beowulf avenged Hygelac’s death.

Now, ready to face one last adversary, Beowulf gathers eleven men to investigate the area. They discover the thief who stole the dragon’s goblet and press him to take them to the barrow. They wish each other luck in the fight that will follow, and Beowulf has a premonition of his own death. On the cliff outside the barrow, Beowulf speaks to his men, recounting his youth as a ward in King Hrethel’s court. He tells of the accidental killing of one of Hrethel’s sons by another and attempts to characterize the king’s great grief. He describes the wars between the Geats and the Swedes after Hrethel’s death, recalling his proud days as a warrior in the service of Hygelac. He then makes his final boast: he vows to fight the dragon, if only it will abandon its barrow and face him on open ground.