Gawain lies in bed during the early hours of New Year’s morning, listening to the harsh wind wailing outside the castle. Before the sun comes up, he rises and prepares to depart, putting on his armor and ordering servants to saddle his horse. Despite Gawain’s anxiety, his armor shines as brightly as it did when he left Camelot. He does not forget to tie the lady’s girdle around his waist. The girdle’s green color stands out against the red cloth of Gawain’s surcoat.

As Gawain and Gringolet prepare to ride off, Gawain silently blesses the castle, asking Christ to keep it safe from harm and wishing joy on the host and the host’s wife. Accompanied by a guide, Gawain crosses the drawbridge and rides back out into the wilderness, up to the heights of the neighboring snowy hills. There, the guide turns to Gawain and proposes a solution to his impending problem: if Gawain leaves now without facing the knight, the guide promises not to tell anyone. No one survives an encounter with the Green Knight, the guide informs Gawain, so continuing is tantamount to suicide. Gawain thanks the guide for his concern, but he refuses to be a coward. The guide wishes Gawain well and leaves at a breakneck pace, afraid to go any farther into the woods.

Gawain strengthens his resolve and heads onward into the strange forest. He sees no sign of buildings and searches without success for a chapel in the wilderness. Finally he notices a strange mound and investigates it. He spots a kind of crevice or cave, fringed with tall grass, and realizes it must be the Green Chapel.

Suddenly certain that the place belongs to the devil, Gawain curses the chapel and is proceeding toward the cave with his lance in hand when he hears the horrifying sound of a weapon being sharpened on a grindstone. Terrified, and fully aware that the sound means his own doom, Gawain calls out to the lord of the place, stating that he has come to fulfill his agreement. The Green Knight replies, telling Gawain to stay put, and continues to sharpen his weapon. The Green Knight emerges from around a crag, carrying a Danish axe. He welcomes Gawain warmly and compliments him on his punctuality, then tells him he will repay him for his own beheading a year ago. Gawain tries to act unafraid as he bares his neck for the deadly blow.

The Green Knight lifts the axe high and drops it. When the Green Knight sees Gawain flinch he stops his blade, mocking Gawain and questioning his reputation. Gawain tells him he will not flinch again, and the Green Knight lifts the axe a second time. Gawain doesn’t flinch as the axe comes down, and the Green Knight holds the blade again, this time congratulating Gawain’s courage. He then threatens Gawain, saying that the next blow will strike him. Angry, Gawain tells the knight to hurry up and strike, and the knight lifts his axe one last time. He brings it down hard, but causes Gawain no harm other than a slight cut on his neck. Gawain leaps away, draws his sword gleefully, and challenges the Green Knight to a fight, telling him that he has withstood the promised blow. The Green Knight leans on his axe and agrees that Gawain has met the terms of the covenant, but refuses to fight. He points out that he has spared Gawain. He feinted the first two times, in accordance with their contract on the first two days, when Gawain gave him the gifts he had received from the lady. The nick from the third blow was punishment for Gawain’s behavior on the third day, when he failed to tell the truth about the green girdle.

This speech reveals that the Green Knight is the host of the castle where Gawain was staying. He again congratulates Gawain on his bravery, calling him the worthiest of Arthur’s knights and excusing his transgression on the third day. Gawain responds by untying the girdle and cursing it, and asking to regain the host’s trust if possible. The Green Knight laughs and absolves Gawain, now that he has adequately confessed his sin. He gives Gawain the girdle to keep and asks him to come back to the castle and stay there longer to celebrate New Year’s, but Gawain refuses.