With the intent of doing mischief, three outlaws accost Valentine only to grant Valentine some leeway on account of Valentine’s impressive bearing. They riddle him with questions and discover that Valentine (who lies) has been banished for justifiably (and honorably) killing a man and that he is fluent in many languages. That Valentine is multilingual impresses them to the extent they propose that Valentine join them and become their leader. They assure Valentine that they each are not unlike Valentine in that they too have been banished for committing that which, in the balance, does not warrant being banished. Outlaw 1, for example, has been banished for trying to win the love of a Duke’s daughter. Speed urges his master to take up the outlaws’ offer only to be told keep his mouth shut. Presently, the outlaws make it clear that if Valentine refuses their offer that he will be killed instantly. Valentine agrees to join them on one condition: that they cease committing mischief on defenseless women and poor travelers. The outlaws assure Valentine that they are above such baseness and presently lead Valentine to the rest of their crew and their treasures which they promise to put at Valentine’s disposal, their new leader.
Proteus laments the fact that the more Silvia rebuffs his advances the more his love grows, compelling him to fawn and grovel before her like a spaniel. Presently, Thurio appears with musicians who will play while Proteus sings a song addressed to Silvia on behalf of Thurio. Meanwhile, Julia, who is disguised as Sebastian and who has found lodgings with the Host while in Milan, is being led by the Host to Proteus. They espy Proteus from a distance, and they stay for the moment as Proteus sings to Silvia. When the song concludes, the Host notices that Julia is not well. When asked what the cause of her distress is, Julia cryptically replies that the musician singing it is the cause. Presently, the Host informs Julia that according to Proteus’ servant Launce, Proteus is head over heels in love with Silvia, and that Launce is currently making preparations to make a gift of his dog to Silvia on behalf of Proteus. Meanwhile Thurio, having been assured that Proteus will win Silvia’s love on his behalf, departs, leaving Proteus to commune with Silvia alone. Silvia proceeds to rebuke Proteus for betraying Valentine and Julia, but Proteus argues that they are both dead. Silvia argues that she will be loyal to Valentine even if he is dead and that Proteus should do likewise with regards Julia. Dejected, Proteus tells Silvia that if he can’t have her, then he will settle for her picture. Though loath to oblige him, Silvia agrees to give him her picture tomorrow. Meanwhile, Julia who was been witness to all this from a distance, stirs the Host who has fallen asleep, and tells him to lead her to Proteus’ lodgings.
Having been summoned to his friend Silvia, Eglamour asks Silvia what is the cause of her summons and discovers that she would like him to help and accompany her abscond to Mantua where she believes her beloved Proteus is currently residing. Citing Eglamour’s vow of chastity to his dearly departed, Silvia argues that if there is anyone who can empathize with Silvia then that person is Eglamour. She adds that if Eglamour denies her request that he at least keep her intentions a secret. Subsequently, Eglamour agrees to accompany Silvia to Mantua, and they agree to meet that evening at Friar Patrick’s where Silvia will go under the pretext of having her sins absolved.
Launce rails against his dog Crab for whose sake Launce has sustained a whipping. Apparently Crab had urinated beneath a dinner table for which Launce had taken the responsibility. It isn’t first time that Launce has sacrificed himself on his dog’s behalf, and Launce wonders what master would do that for his dog when he is accosted by his master Proteus who is accompanied by Julia who is disguised as Sebastian. Proteus wonders if Launce has delivered Silvia the puppy on Proteus’ behalf. Launce replies that as the puppy was stolen, he had taken it upon himself to make a gift of Crab instead. Unfortunately, Silvia did not take a liking to Crab (Crab had urinated on Silvia’s dress as well as below the dinner table) which is the reason Launce has returned with Crab. Exasperated, Proteus orders Launce to leave and not to return until he finds the puppy. Presently, Proteus turns to Sebastian (Julia), and praising his gentle upbringing, commissions him to deliver a ring (the ring given him by Julia) and a letter to Silvia in exchange for Silvia’s promised picture portrait. Sebastian promises to do so but not without expressing some pity for Julia. Alone, Julia laments her predicament.
Presently, having met Sylvia, Sebastian tenders her Proteus’ ring and letter. However, citing Proteus betrayal of Julia, Sylvia refuses to accept the ring, which she knows Julia had given Proteus, and, arguing that the contents of the letter could be nothing more than Proteus’ useless harping on his love for Sylvia, Sylvia shreds the letter unread. When Sebastian expresses his approval of Sylvia’s actions, Sylvia plies him with questions which reveal that Sebastian is well acquainted with Julia. Indeed, Sebastian goes to great lengths to garner Sylvia’s sympathy for Julia, making a reference to the story of Ariadne who had been grievously perjured by Theseus. By and by, giving Sebastian her portrait which she had promised Proteus, Sylvia expresses her sorrow for Julia at which point the two go their separate ways.
Alone, Julia reflects on Sylvia’s kindness and gentility. Then taking note of Sylvia’s portrait, Julia wishfully thinks how with a little disguise, that’ll make her resemble Sylvia, she may win Proteus’ love again. She has mind to mangle the portrait, but decides to preserve it on account of its representative who is virtuous and kind.