Don Quixote and Sancho enter their village. Don Quixote overhears two boys quarreling, and one tells the other he will never see it again. Quixote takes this as an omen that he will never see Dulcinea.
A hare fleeing hunting dogs takes shelter under Dapple. Sancho picks it up, and Don Quixote becomes more morose--seeing it as another bad omen. Sancho proposes that the hare is Dulcinea. Sancho then asks the boys what the quarrel was about. One answers that he took a cage of crickets from the other boy. Sancho buys the cage, saying that this breaks the omens.
The sportsmen ask for their hare back, and Don Quixote returns it. They run into the curate and Samson Carrasco, who give them a warm welcome. They go to Quixote's house. Teresa and Sanchica greet Sancho, and Teresa tells him he does not look like a governor. Sancho tells her he will reveal everything, and that he brings home money that was gotten without harming anyone. They return to their home.
Don Quixote tells the curate and Samson about his defeat, and how he now plans to become a shepherd. The housekeeper and niece overhear this and are upset that he is planning to take off again. Don Quixote tells them he will always take care of them, and to now help him to bed, for he doesn't feel well.