Don Quixote continues his lecture on the superiority of knights over scholars. Everyone is impressed with his intelligence, but still no one believes that chivalry is more important than scholarship. The captive begins to tell the story of his imprisonment and rescue in Moorish lands.
The captive tells the group that he left home many years earlier after his father divided the family estate and ordered his three sons to leave home to become a soldier, a priest, and a sailor, respectively. He gives a lengthy account of the wars in which he has fought. The captive mentions that he fought alongside Don Pedro de Aguilar, Ferdinand’s brother.
The captive recounts his capture and imprisonment in Algiers. One day he was on the roof of the prison when Zoraida, who had fallen in love with him from afar, dropped some money to him from a window. Along with the money, she included a letter that said she had converted to Christianity and that offered him financial assistance to escape, free her, and bring her to Spain to be his wife. The captive used Zoraida’s money to ransom himself and some of his fellow prisoners, buy a boat, and make arrangements to free Zoraida from her father’s home.
The captive says that he snuck into Zoraida’s father’s garden to see her, told her of his plan to escape from Algiers, and finally kidnapped her. Zoraida’s father awoke while the captive was kidnapping her, so they brought the father with them on the ship and dropped him off some miles away from the city. The captive and his companions rowed for several days until French pirates robbed them of all Zoraida’s riches. Once they arrived in Spain, they determined to go to the captive’s father, baptize Zoraida, and get married.
After the captive finishes his story, a judge named Licentiate Juan Perez de Viedma arrives at the inn with his beautiful daughter, Clara. The captive realizes that the judge is his brother. The priest, after successfully testing the judge to see whether he still loves his missing brother, reunites the two. While everyone sleeps that night, a youth sings love ballads outside the inn. Cardenio creeps into the women’s room to tell them to listen.
Dorothea wakes Clara so she can hear the singing, saying it is the most beautiful singing she has ever heard. Clara reveals that the singing youth is actually a young lord who used to live with his father next door to her and the judge. Clara adds that he has followed her in disguise because he is in love with her. She and the young lord have never spoken, but she loves him and wishes to marry him. Dorothea promises to try to arrange for Clara to speak with him.