In a room at the Palace, the Archbishop of York, Queen Elizabeth, the Duchess, and the young Duke of York (young Edward Prince of Wales' younger brother) discuss the impending arrival of the prince. The young Duke of York hopes he has not grown faster than his older brother because Richard, his uncle, told him nice flowers grow slow and weeds grow fast. The Duchess says that that can't be true as Richard himself grew slowly. She dismisses the young Duke of York when he makes a joke about Richard.
The conversation the Duke of York recounts shows Richard using words to lower the boy's esteem, another of Richard's manipulative tactics. Again, the Duchess is able to see the truth behind Richard lies, perhaps because she is a woman and perhaps because she is a special woman—his mother. Richard's words imply that a person's worth and goodness are directly related to their external appearance – which to him is likely a good joke, as he is claiming this even as he is tricking everyone to think he is good when he has such a deformed body (and is in fact crooked morally as well).
A messenger enters and announces that Rivers, Grey, and Sir Thomas Vaughan have been imprisoned by Richard and Buckingham. He doesn't know for what offense. Elizabeth laments "the ruin of my house" and the Duchess cries out that she'd rather die than continue to see more battling over the throne, of which she's already seen so much in her lifetime. Elizabeth seeks sanctuary (protection in a church) with the Duke of York, and the Archbishop of York offers to conduct them. All exit.
Queen Elizabeth is upset because, by imprisoning her brother, her son, and her ally, Richard is disempowering her family. She hurries to protect herself and her son by seeking sanctuary, a practice of the time by which people could seek protection from all secular powers in a church.