The group is about to read the remainder of the story when Sancho races in and tells them that Quixote is battling the giant who is the enemy of the princess. Sancho says there is blood everywhere because Quixote has beheaded the giant. The landlord says no, Quixote has cut open the wine skins.
When the group goes upstairs, they find Quixote asleep and acting out his dream. The landlord is enraged at all the spilt wine. The curate and Cardenio restrain him from attacking Quixote. The barber splashes cold water on Quixote, and he wakes up. Sancho is looking of the giant’s head.
The landlord is cursing because he knows he will not be paid for the wine skins. His wife also complains about all the damage Quixote has done or has caused to be done. The curate tells them he’ll try to reimburse them as much as possible.
Sancho is depressed that he couldn’t find the giant’s head and blames the enchantment of the place. Dorothea tells him she believes him, and he will be rewarded.
The others encourage the curate to finish the story about Camilla and Anselmo. Anselmo was happy in Camilla's virtue. Camilla pretended to be hostile towards Lothario. Lothario asked to be excused from the house, but Anselmo wouldn't hear of it. Leonela continued her affair, confident Camilla would keep her secret.
One night, Anselmo encounters a barred door to Leonela's room. He barges in and tries to seize the intruder. Leonela tells him that the man is her husband. Anselmo doesn't believe her and threatens to kill her if she doesn't tell him the truth. She asks him to let her tell him the next day when she is not so rattled, then she assures him the man is someone who has promised to be her husband.
Anselmo tells Camilla what has transpired. Fearing Leonela is going to reveal her secret, Camilla packs and goes to Lothario, begging his help. He places her in a convent, and he himself leaves the city.
The next morning, Anselmo has found that Leonela has fled the house. He also finds Camilla gone. When he goes to Lothario's house, the servants tell him their master has fled. When he returns home, his servants have left the house. He realizes he is ruined. He locks up his house and plans to go to his friend's home city.
He encounters a man coming from Florence. The stranger tells him that Leonela has spread the word that Lothario has ran off with Camilla. The governor is searching for the couple, but nobody knows where they fled.
Anselmo fall ill and dies. He leaves behind a note, saying he caused his own misfortunes. He tells Camilla he forgives her. Camilla remains at the convent, though she doesn't take the veil until she hears that Lothario was killed in battle. However, she dies of grief.
The curate likes the tale but doesn't believe it is true, for no husband would be so foolish to attempt such an experiment.