Shaken by the helmet’s moving feathers, Manfred seeks an explanation from Jerome, who says that Manfred has angered heaven and must submit himself to the church. At Jerome’s request, Manfred agrees to let Theodore live and has Jerome see who is waiting outside the castle. The herald outside asks for “the usurper of Otranto,” which angers Manfred. Eager to reassert his dominance, Manfred reneges on his promise to Jerome and ransoms Theodore’s life in exchange for Isabella.
Just as Manfred almost repented in Chapter 1 for treating Hippolita poorly, he nearly does so again by turning to Jerome’s authority. However, once again, he is unable to overcome his pride and hunger for power.
Once Jerome is ushered out and Manfred imprisons Theodore in a tower, the herald announces the reason for his arrival: on behalf of his lord Frederic, he is demanding the safe return of Frederic’s daughter, Isabella, who had fallen into Manfred’s hands after he bribed her guardians. Frederic also demands control of Otranto, as Frederic is the closest blood relative to Alfonso. The herald challenges Manfred to single combat. The narrator reveals that Manfred was aware of the legitimacy of Frederic’s claim over Otranto, and that it was for this very reason that he had tried to unite his line with that that of Frederic through Isabella. Thinking he might be able to convince Frederic to give him Isabella’s hand in marriage, and wanting to prevent Frederic from learning anything about Isabella’s flight, Manfred invites Frederic’s champion into the castle. Meanwhile, Jerome is extremely anxious about the fates of Theodore, Isabella, and Hippolita. These anxieties are only intensified when he reaches the church, where he discovers that Isabella has gone missing again. Jerome deduces that Isabella heard a rumor from one of the monks that “the princess was dead” and fled the church, believing that Manfred had killed Hippolita and would be coming for her next.
The announcement made by the herald reveals that Manfred is even more devious than previously shown. Whereas at the beginning of the novel, Isabella was under the impression that her engagement to Conrad had been arranged by Frederic, here the reader learns that Manfred had bribed her guardians to make the wedding happen. As the herald’s claim shows, legitimate rule is determined by bloodlines. Despite the fact that Frederic is the best claimant to the throne, Manfred continually tries to undermine the rules of rightful kingship, just as he does with marriage and religion.
Back at the castle, Frederic’s champion has brought a host of knights and servants with him, as well as a gigantic sabre, or sword. Manfred claims he will fight Frederic’s champion the next day and presents a façade of hospitality, all the while asserting the legitimacy of his rule, trying to gain the knights’ confidence first through a friendly feast, then through pity for his recently lost son Conrad. The knights barely respond to Manfred’s obviously contrived efforts to appease them, but Manfred continues to talk and begins to discuss his marriage to Hippolita. As he did with Jerome, he claims that his supposedly incestuous marriage has troubled him and that in order to avoid incest and restore Alfonso’s line, he intended to marry Isabella, “who is dear to [him] as [his] own blood.”
This is the first appearance of the giant sword, the appearance of which helps to fulfill the prophecy about the end of Manfred’s lineage. That the sword is a weapon, which is meant to attack, rather than a piece of armor, which is meant to protect, suggests that an abrupt and perhaps violent change will occur. Acknowledging Isabella as “my own blood,” Manfred makes the same illogical argument to Frederic’s men that he made to Jerome: that he must commit incest in order to avoid incest.
At that moment, Jerome and his fellow friars arrive at the castle, interrupting Manfred’s speech. Jerome then reveals to Manfred, as well as to Frederic’s knights, of Isabella’s flight from sanctuary. Manfred pretends that he himself sent Isabella to sanctuary in the first place, and Jerome, fearing for Theodore’s life, decides not to correct him. However, another friar declares that Isabella had in fact escaped from the castle to the church just the night before. One of Frederic’s knights then proclaims Manfred’s treachery and begins to organize a search for Isabella. Manfred secretly gives orders to contain the knight’s men even as he appears to assist him.
Manfred’s plans are again thwarted by divine will—however this time, his attempt to assuage Frederic’s men are interrupted by monks, rather than by the supernatural. Though the truth about Isabella’s escape is revealed, Manfred nevertheless attempts to maintain his control through deceit and sin.
Manfred also gives orders for his men to search for Isabella. But this leaves Theodore’s tower unguarded, and Matilda takes the opportunity to rescue Theodore. The two of them instantly fall in love. Matilda offers to send him towards the sanctuary of the church, but Theodore refuses on the grounds that sanctuary is “for helpless damsels, or for criminals.” So, instead, Matilda gives him a suit of armor as well as directions toward the caves behind the forest.
By rescuing Theodore from a locked tower, Matilda reverses traditional gender roles – Matilda acts as the usually male knight in shining armor, while Theodore plays the damsel in distress. However, once he is free, he refuses to occupy a normally “feminine” role by dismissing sanctuary as the domain of “helpless damsels, or for criminals,” — without recognizing that he himself was helpless and was charged as a criminal (though he was innocent). By giving Theodore the suit of armor, Matilda gives him not only a means of protection but also a symbol of nobility and a masculine token of chivalry, thus returning him to a traditional gender role.
Theodore goes to one of the church’s convents to tell Jerome that he is free, but when he arrives he discovers that Jerome is elsewhere and that Manfred’s men are searching for Isabella. Gallant and eager for an adventure to prove himself, he races to find Isabella first in order to protect her from Manfred. He soon finds her in the caves to which Matilda had given him directions and vows to protect her. When Isabella is reluctant to retreat further back into the caves with a strange man, he assures her that he is in love with another woman.
Now in the suit of armor and seeking adventure, Theodore is the archetypal chivalric knight from medieval literature. As an archetypal damsel in distress, Isabella is the perfect quest for Theodore to prove his worth as a knight; by doing so, he solidifies his identity as the story’s hero.
Not long after, an armed knight approaches the mouth of the cave. Theodore, unaware of the arrival of Frederic’s knights, believes that this man is working for Manfred and badly wounds him. Only then does Theodore discover that the knight is Frederic’s champion. After confirming that the woman in the cave is Isabella, the knight, believing that he is dying, reveals his secret identity: he is Frederic, Isabella’s father, and the three of them return to the castle.
The chapter ends with the revelation of another long-lost father in disguise, but this time it is Isabella’s father Frederic who appears. Isabella’s comment to Manfred in Chapter 1 that she will not marry until her father’s return, combined with Frederic’s arrival, suggests that another wedding may soon be underway.