They are interrupted by an exclamation from Don Quixote. When they go to his room, he is sword-fighting with an invisible adversary. They manage to get him back into bed. They give him food,and he falls asleep.
The housekeeper burns all the books, even the ones that had been put aside to be saved. The curate and barber also wall up the room so Quexana won’t be reminded of the books. They plan to tell him that a wizard took the books and the room.
Don Quixote, when he wakes up, goes to the library but cannot find it. The housekeeper tells him the room and books are gone—both taken by the Devil. The niece gives a more elaborate story about a wizard who arrived on a serpent who cast a spell to make the books and library disappear.
Don Quixote knows the wizard. He is his enemy Freston, who is determined to destroy him because he knows it is Quixote’s destiny to defeat him. The niece tells him it is no concern of his. He should shrug off these cares and remain at home. Don Quixote, while he reveals his plans to re-establish the knighthood, seems content to stay at home.
However, he manages to convince his poor and unintelligent neighbor, Sancho Panza, to become his squire. Quixote promises to make him a governor of one of his captured islands.
Quixote sells his belongings to acquire money. He provides Sancho with a uniform that is in bad repair. Sancho wants to take his donkey. At first, Don Quixote is hesitant—for he never read anything about squires riding on donkeys. However, he finally agrees, since he plans to get Sancho a real horse when he defeats an opponent. He gives Sancho the details of what they need and when they will depart.
They leave one night without telling either of their families of where they are going. Sancho reminds Quixote of his promise to give him an island, and he assures his master that he will be able to rule it. Quixote says it is a custom to make squires governors of territories that the knights they serve win. He promises that he’ll not only make Sancho a governor, but eventually he will make him a king as well.
Sancho doesn’t think his current wife is worthy enough to be a queen or even a countess. Quixote tells Sancho to trust in God to give him his rewards, but not to settle for anything less than lord-lieutenant.