Don Quixote is thinking about Dulcinea's disenchantment and what he will do during his year of retirement while resting under a tree. Sancho comes up, praising Tosilos for his generosity. Quixote admonishes him for believing it was Tosilos, but then asks if Tosilos mentioned Altisidora. Sancho says he didn't ask. Don Quixote tells Sancho he couldn't love Altisidora, being loyal to Dulcinea. Altisidora had loved him, and he can at least keep a memory of her.
He then reproaches Sancho for his lack of progress in disenchanting Dulcinea. Sancho has doubts that whipping himself will restore Dulcinea, and he only wishes to do so if he isn't made uncomfortable.
Don Quixote decides he will become a shepherd during his year of retirement. They can enjoy their wandering life. Sancho suspects that Samson Carrasco, the curate, and other friends will become shepherds too and follow them.
Don Quixote romanticizes about their new life. Sancho is full of proverbs, which Don Quixote again chides him about.
Sancho falls asleep, thinking about the hard life of a squire. Don Quixote spends a wakeful night.