The duke and duchess send word to their servants on how to behave. They give Don Quixote a welcome befitting a knight.
Sancho enjoys the favor of the duchess. He enjoys the good life and indulges his appetite whenever he can. Don Quixote is amazed at the reception he receives, befitting a knight. He goes to help the duchess off her horse, but she refuses--feeling unworthy to impose on a knight.
Sancho asks the duenna to fetch his donkey and see it is properly cared for. The duenna tells him that isn’t her job and to go fetch his own donkey. Sancho had heard Quixote say that duennas had tended to Lancelot’s horse.
Overhearing their quarrel, the duchess asks what is wrong. The offended duenna tells her. The duchess tells Sancho that the duenna is a lady. Sancho says he meant no disrespect. He is fond of his donkey, and she seemed like a kind soul to entrust its care to. The duke assures Sancho the donkey will be cared for.
Quixote and Sancho are shown to their rooms and receive fresh shirits. Quixote chides Sancho about insulting the duenna. Sancho’s behavior reflects on him. They won’t respect him if Sancho behaves badly. He cautions Sancho to watch his tongue.
They go to dinner, which is full of ceremony. Sancho wants to tell a story. Quixote reminds him of his earlier warning. Sancho says he remembers it. Quixote suggests that the duchess have Sancho removed from the table, but she likes Sancho.
Sancho, in trying to appear well-bred, belabors the story—much to the chagrin of the ecclesiastic guest. The point of the story was how a gentleman and laborer argued about who should sit at the head of the table. The laborer tries to behave with good breeding and insist that the gentlemen sit there. The gentleman says wherever he sits is the head of the table. Don Quixote is angry at the moral of the story.
The duchess, sensing this, changes the subject and asks if he has heard from Dulcinea. Quixote tells her that Dulcinea is unfortunately enchanted and not herself. Sancho remarks about how agile she is. He takes credit for saying she was enchanted, though he says she is as enchanted as his father is.
The ecclesiastic doesn’t approve of the duke indulging Quixote’s fooleries. He orders Quixote to forget this nonsense and to go home to his family. Stop making himself a fool everyone laughs at. There are no giants, marauders, knights, or enchanted maidens these days.