Don Moreno follows the Knight of the White Moon to a hostel. The Knight of the White Moon identifies himself as Samson Carrasco. He is a friend of Don Quixote's. He believes that Quixote's madness would be cured if he stayed home for a year. He attempted to do this three months ago, but Don Quixote vanquished him. He asks that Don Moreno not betray him.
Don Moreno tells Carrasco he does the world a great injustice in trying to cure Quixote, whose madness gives more pleasure than his sanity. However, he doesn't think Carrasco will be successful in curing him. He himself prays the man will never return to his senses, but he won't betray Carrasco's true identity to Quixote. Carrasco leaves, and Don Moreno reports back to the viceroy--who is equally dismayed at the news.
Don Quixote stays in bed a week, totally depressed. Sancho tries to cheer him up. He is also disappointed by Quixote's defeat. Though he gave up his governorship, he had hoped to become a count. That is unlikely to happen now. Don Quixote points out that he only agreed to stay at home for a year. He will be free to roam again after that term has expired, and so there is still a chance for Sancho to become a count.
Don Moreno tells Don Quixote that the Spanish renegade was successful in rescuing Don Gregario, and he is now at the viceroy's house. They all come down to greet him. Ricote rewards the renegade, who becomes a changed man.
The viceroy then tries to help Ricote and his daughter remain in Spain, for it is obvious they are good Christians. Don Moreno believes it will only require a few bribes and favors. Ricote says it will not be enough. His people have done injury to Spain, and the authorities are right in wanting to get rid of them.
Don Gregario is to go back to his parents to relieve them of their ansxiety. Ana Felix will remain in the house of Don Moreno or in a monastary. Ricote will remain with the viceroy.
Don Gregario leaves. Don Quixote and Sancho also depart soon after.