The duchess bids Sancho to sit, though at first propriety keeps him from accepting. At her insistence, he does. Damsels and duennas surround them.
The duchess ask him how he dared to create that lie about Dulcinea winnowing wheat, which seems disloyal of him as a squire and an injury to the lady. Sancho checks behind the hangings to make sure they aren’t being overheard. He then replies that though Quixote can say some very wise things, he is a lunatic. He is able to fool Quixote when it is necessary, like convincing him Dulcinea is enchanted.
The duchess says Sancho is more of a madman and a fool if he serves Quixote, knowing he is crazy and still believing his promises. Why should they give Sancho an island if he cannot govern himself?
Sancho sees her point. However, he loves Quixote and is grateful to him. If she doesn’t want to give him an island, then he’ll wait for the rewards God intends to give him. The duchess assures Sancho her husband will keep his word. She warns him to be careful about how he governs, for the subjects are well-bred and loyal. Sancho says he is a good man to the poor, and he is watchful of bad people.
The duchess tells Sancho he is a victim of an enchanter, for the peasant girl really is Dulcinea. There are good enchanters, and she guarantees Dulcinea will be restored. Sancho admits this is possible. He never means to injure Quixote.
She then asks him abot his master’s tale about what occurred in the Cave of Montesinos. Sancho relates it to her. The duchess says this proves the wench is Dulcinea, and there are enchanters creating mischief. Sancho says he doesn’t fight Quixote’s enemies.
The duchess then tells him it is time for him to rest. He thanks her for taking care of his Dapple. The duchess goes to her husband and plans a practical joke to play on Quixote.