In the street, Iago and Roderigo wait to ambush Cassio as he emerges from his visit to Bianca. Iago convinces Roderigo to make the first attack, and promises to back him up if necessary. In an aside, Iago comments that he wins either way: if Cassio kills Roderigo, he gets to keep Roderigo's jewels; if Roderigo kills Cassio, then there's no danger that Cassio and Othello will ever figure out his plot.
Iago manipulates Roderigo's jealousy and sense of honor to get him to attach Cassio. Iago now shows the depths of his depravity. He doesn't just want to ruin Othello, he's willing to trick people into attacking each other and dying as long as it serves his own ends.
Cassio enters. Roderigo attacks, but Cassio's armor turns away the thrust. Cassio counterattacks, wounding Roderigo. From behind, Iago darts in and stabs Cassio in the leg, then runs away. From a distance, Othello hears Cassio's shouts of pain and believes that Iago has killed Cassio. Moved by Iago's loyalty to him, Othello steels himself to go and kill Desdemona in her bed.
Iago's actions are cowardly, sending Roderigo ahead of him and then attacking Cassio from behind. Othello once again misinterprets what has happened, though, to Iago's benefit. Othello's professed admiration for Iago, coupled with his newly misogynistic and violent plans for Desdemona, contrast poignantly from his declarations of love in 1.3.
Lodovico enters with Graziano (Brabantio's brother). They hear the cries of pain from Cassio and Roderigo, but it's so dark they can't see anything. Iago enters, carrying a light, and is recognized by Lodovico and Graziano. He finds Cassio, and then Roderigo. He identifies Roderigo as one of the "villains" who attacked Cassio, and stabs and kills Roderigo.
Iago here reveals the full extent of his treachery, killing the character with whom he has plotted onstage since 1.1 in order to cover his tracks. Iago, basically, has no honor to lose.
As Iago, Lodovico, and Graziano tend to Cassio's wounds, Bianca enters and cries out when she sees Cassio's injuries. Iago, meanwhile, makes a show of recognizing Cassio's attacker as Roderigo of Venice, and also implicates Bianca as being in on the plot to kill Cassio by getting her to admit that Cassio had dined with her that night.
Although the other characters dismiss Bianca as a promiscuous woman, she shows real affection for Cassio. Iago, however, uses misogynistic stereotypes to implicate the (innocent) Bianca, and further put himself in the clear.
Cassio is carried offstage and Emilia enters. When Iago explains what has happened, Emilia curses Bianca. Bianca responds by saying that she is as honest as Emilia. Emilia curses her again, and then exits, sent by Iago to bring news of what has happened to Othello and Desdemona.
The brief fight between Emilia and Bianca shows that just as Othello might hold racist feelings about himself, so do women entertain gender prejudices and stereotypes against other women.
Iago has Bianca arrested, and in an aside to the audience says "This is the night / That either makes me or fordoes me quite" (5.1.130–131).
Iago's reference to the night as a dramatic climax once again underscores his self-consciously chosen role as "director."