While at the inn, Don Quixote and Sancho encounter Don Alvaro Tarfe, whom Don Quixote recalls from the false sequel. Don Alvaro admits that the false Don Quixote was his best friend but that the Don Quixote he sees now is the real Don Quixote. Don Alvaro swears to this account before the mayor, who records it. They stay overnight in the woods, where Sancho completes his whipping, still only whipping the trees.
As Don Quixote and Sancho enter their village, they hear two boys quarreling and a hare running from greyhounds. Don Quixote takes these sounds for bad omens, but Sancho disagrees. Sancho goes home to his family, while Don Quixote finds the priest, the barber, and Sampson. He tells them about his retirement and his plan to become a shepherd. They support his plan wholeheartedly. They also plan the jokes they will play on Don Quixote, despite the protests of the niece and the housekeeper, who want only to feed Don Quixote and put him to bed.
For me alone Don Quixote was born and I for him. His was the power of action, mine of writing.
Don Quixote falls ill with a tremendous fever and lies in bed for six days, during which Sancho never leaves his side. When he wakes on the seventh day, Don Quixote has returned to sanity and recognizes that his real name is Alonso Quixano. He disavows all books of chivalry and repents his past actions. The priest, the barber, and Sampson come by and try to persuade him to pursue further adventures, especially the disenchantment of Dulcinea, but Don Quixote wants only to make his will. He leaves everything to his niece, his housekeeper, and Sancho. In his will, Don Quixote also tells his friends to ask the author of the false sequel to forgive him for providing the author with the occasion to write such nonsense. Don Quixote then dies.
Cide Hamete Benengeli mourns Don Quixote’s passing, saying that he and Don Quixote were born for each other—Don Quixote to act, Benengeli to write. He adds that his sole purpose in writing was to rouse contempt for the “fabulous and absurd stories of knight-errantry.”
Once Don Quixote renounces chivalry, he ceases to exist. After much digression on his way home, he unexpectedly has a bout of sanity and dies, as though the chivalric knight within him cannot live and breathe once he returns to a world whose values are different from his own. Don Quixote dreams for one night of being a shepherd and wakes a week later recanting everything that has come before—an act that may devalue many of the novel’s adventures. Benengeli implies this devaluation when he writes about the dubious nature of the incident at Montesinos’s Cave. Not even the apparently earnest attempts of Don Quixote’s friends to make him rise and roam the countryside as a shepherd inspire him to live.
The meeting with Don Alvaro provides Don Quixote with one last chance to assert his identity. Already in a downward spiral, Don Quixote temporarily breaks out of his funk during this meeting. He asserts his dignity and former glory by repudiating the fake Don Quixote and by forcing the best friend of the fake Don Quixote to swear allegiance to him. Though this last-ditch effort to assert his honor may seem pathetic in light of his recent defeat by the Knight of the White Moon and his plans to retire, it displays Don Quixote’s sincere nature.