Prince Myshkin withdraws into his room with Kolya, who goes with the prince to comfort him. The young boy tries to reassure the Myshkin that he did the right thing in not responding to Ganya's slap by demanding a duel (a common practice at the time). Kolya then expresses his confusion as to why Nastassya Filippovna decided to come and visit them. It is unclear why, if she had intended to insult them, she acted almost reverently toward Ganya's mother just before leaving.

As Kolya exits the room, Varya comes to thank the prince and to ask him whether he knows Nastassya Filippovna, as she seemed to listen to him at the end. Myshkin denies knowing her prior to that day. Ganya suddenly enters the room, passionately apologizing to the prince for slapping him and for thinking him an idiot. Ganya refuses to apologize to his sister, however, but Varya says she forgives him anyway and begs him not to go to Nastassya Filippovna's that evening. Varya insists that the dishonor is not worth the 75,000 rubles Ganya has been promised in marriage. She leaves the room in distress.

Left alone with Ganya, Myshkin asks Ganya to explain why he is marrying Nastassya Filippovna. The prince is hesitant that Nastassya Filippovna will marry Ganya, and is also doubtful that Ganya will actually get the promised money afterward even if she does decide to marry him. Ganya, however, is positive that she will marry him; he believes she is convinced that he is in love with her and that she only behaved with such insolence in his house because of her vain, capricious nature. Ganya also says that if Nastassya Filippovna does not obey him when they are married, he will leave her and take the money with him. He will not allow her to make him look ridiculous. Ganya then asks Myshkin's opinion on the matter and asks if he believes Ganya to be a scoundrel. The prince replies that Ganya is not a scoundrel, but that he is simply an average man with an average mix of strengths and weaknesses.

Unhappy to hear himself described as ordinary, Ganya switches the conversation to the subject of his father, telling Myshkin that his father keeps a mistress. Ganya laughs upon thinking of all the lie-ridden stories his father tells everyone. Myshkin tells Ganya that he laughs like a child; Ganya replies that he realizes that he is indeed still somewhat of a child. However, he also says that he is driven by his goal of having more money: not only will being rich raise his social status, it will also make him more original. Ganya then asks Myshkin if he is in love with Nastassya Filippovna. The prince hesitantly answers that he is not. Ganya does not really believe Myshkin, and he adds that contrary to what Myshkin may think, Nastassya Filippovna is a virtuous woman. She has not lived with Totsky for a long time. Ganya leaves in a good mood.

Kolya enters and passes Myshkin a note from General Ivolgin, who is in need of money. The prince decides to go with Kolya to see the general. Myshkin reaches the café, where the General is sitting with a bottle in front of him, and he gives the general a note of twenty-five rubles recently loaned to him by General Yepanchin. Myshkin asks for fifteen back. The prince then asks General Ivolgin to take him to Nastassya Filippovna's. Although the general agrees, he first drags the prince to the house of Captain Terentyev's widow, who is the general's mistress.

When they arrive, Madame Terentyev demands money that the general promised her; he obliges, giving her the twenty-five rubles Myshkin has just given him. In the widow's apartment the prince finds Kolya, who has been there visiting the widow's son, Hippolite, who is ill with consumption. Kolya has just told Hippolite what happened at the Ivolgin house; unlike Kolya, Hippolite thinks Myshkin is a scoundrel for not challenging Ganya to a duel. The prince, having lost hope that General Ivolgin will take him to Nastassya Filippovna's, asks Kolya to take him there instead. The boy, though surprised that Myshkin would go to a dinner party uninvited and not dressed up, takes him to her house. Kolya then says he pities his father and his mother, who help Hippolite with money and clothes.