The castle’s doctors examine Frederic’s wounds, none of which are life-threatening. As he is being cared for, Frederic meets Hippolita and Matilda, and falls in love with Matilda. And though Matilda’s love for Theodore remains, she is uncertain of his love for her because he arrived at the castle with Isabella, who is also clearly in love with Theodore. Wishing to spend more time with Matilda, Frederic tells them all his backstory – that he fought in the Crusades and was captured by “infidels.” While captured, he dreamt that his daughter was in danger and that he would learn more about what to do by going to a forest near Joppa. After he was freed, he searched for the forest, as his vision directed him, and was led to a hermit on his deathbed. With his dying breaths, the hermit told Frederic about a secret from St. Nicholas: where to find a giant sword. Once Frederic and his men unearthed the sword, they saw that it contained a prophecy saying that “Alfonso’s blood alone” can save Isabella at Otranto.
Frederic’s desire for Matilda mirrors that of Manfred’s for Isabella. Like Manfred, who was unable to recognize his daughter Matilda, Frederic is at first unable to recognize Isabella. Both Manfred and Frederic are fathers who desire each other’s daughters, suggesting perhaps a latent incestuous desire for their own daughters. Matilda’s uncertainty about Theodore’s affection foreshadows her later tense interaction with Isabella.Frederic’s arrival at Otranto (and thus an impediment to Manfred’s plans) is revealed to have been driven by divine will, that of St. Nicholas. The giant sword contains the second prophecy of the novel, one that further emphasizes Isabella’s role as a damsel to be saved.
Manfred arrives and is shocked to see an armor-clad Theodore, whom he mistakes for Alfonso. When Manfred realizes it is Theodore, he is furious that Theodore escaped. Assuming Jerome helped him, Manfred demands to know how Theodore came to be separated from and then reunited with his father. Theodore reveals that he was kidnapped as a child by pirates, along with his mother. Though she died not long after, she left him a note saying that he was the son of the Count of Falconara. He remained the pirates’ slave until two years before the story takes place, when a Christian ship set him free. After unsuccessfully searching for his father at his castle and in Naples, he wandered into Otranto and began to work as a farmhand in order to support himself. Frederic vouches for Theodore’s bravery, warmth, and honesty, after which they all retire to their rooms.
In telling Manfred how he came to be at Otranto, Theodore confirms his nobility by mentioning a document confirming his identity. As Manfred will later reveal, such documents about bloodlines are especially significant for determining rulership. That the ship that freed Theodore was a Christian ship reinforces the novel’s alignment of good and evil with Christian and non-Christian characters.
The next day, Matilda and Isabella decide to meet, as they are both in love with Theodore, who has come between them. Aware that Theodore is in love with Matilda, Isabella decides to encourage Matilda to become a nun as she always wanted, while Matilda wishes to find out from Isabella if Theodore has feelings for her. After some awkwardness in which both women are reluctant to admit their feelings, Isabella confesses that Theodore is in love with Matilda. Both women try to give up their claim to the other for the sake of their friendship, until they are interrupted by the arrival of Hippolita.
Matilda’s and Isabella’s love for Theodore forms a wedge in their friendship, causing them temporarily to place their jealousy over their better natures. It is only when they relinquish their claim to romantic love that they are able to revert back to their selfless and generous natures. The narrator thus presents romantic love as a divisive, corrupting, and in Manfred’s and Frederic’s case, potentially incestuous force.
Hippolita, who believes that Otranto will fall into Frederic’s hands, announces that she has proposed to Manfred a marriage between Frederic and Matilda in order to unite the claims of both lines. The two young princesses are horrified, especially Isabella, who hints at Manfred’s crimes and tells Hippolita that Manfred intends to divorce her. Though she believes in Isabella’s innocence, a grief-stricken Hippolita makes excuses for her husband, suggesting that Isabella perhaps misunderstood the situation, and hinting at a disastrous destiny she believes will befall them all. She then resolves to agree to the divorce and to become a nun in one of the nearby convents, believing that this “sacrifice of [her]self may atone for all.” When Isabella begins to pray to the angels of heaven that she won’t have to marry Manfred, Hippolita stops her, reminding her that her father has authority over her. Despite her newfound awareness of Manfred’s crimes, Hippolita refuses to acknowledge them.
Though Hippolita becomes aware of at least some of husband’s misdeeds, she refuses to believe them, choosing her devotion to her husband over her conscience. Though Hippolita’s proposed resolution, divorce and nunhood, may be a sacrifice in her own eyes, it is exactly what her husband wants and would only make Manfred’s attempt to marry Isabella that much easier. That Hippolita stops Isabella from praying to heaven so that she will obey her father first indicates the extent to which Hippolita’s priorities are out of order; just as she privileged her husband’s wishes over her conscience, Hippolita privileges fatherly authority over divine authority.
Hippolita then finds Jerome in the church, seeking his guidance about the morality of a divorce. At that moment, Jerome is urging his son to suppress his feelings for Matilda, as “a tyrant’s race must be swept from the earth to the third and fourth generation.” Unused to having to obey a father’s orders, though, Theodore finds himself unable to stop loving Matilda. Hippolita asks Jerome to dismiss his son, and once they are alone asks for his opinion about marriages between Matilda and Frederic, and between Isabella and Manfred, as well as her consent to a divorce. Though Hippolita finds both proposals agreeable, Jerome vehemently opposes them, explaining that a divorce resulting in the marriage between Manfred and Isabella would be against heavenly will.
Originating from the Bible, Jerome’s declaration about the destruction of a tyrant’s race both foreshadows Matilda’s death and categorizes it as divinely sanctioned. Theodore’s love for her, despite his father’s warning, is therefore a struggle between his passion and his piety.
While Hippolita is conversing with Jerome, up at the castle Manfred is proposing to Frederic that they marry each other’s daughters. Frederic, tempted by the prospects of eventually ruling Otranto and marriage to Matilda, weakly protests the double marriage for the sake of appearances, but eventually agrees on the condition that Hippolita give her consent.
Like Hippolita and Theodore, Frederic has difficulty controlling his worldly desires for both Matilda and political rule, and is tempted by Manfred’s proposal. The double marriage that Manfred proposes would be incestuous not only because of Isabella’s position as Manfred’s de facto daughter, but also because the marriages would result in entangled in-law relationships already considered incestuous. If Frederic and Manfred were to marry each other’s daughters, they would be their own daughters’ sons-in-law.
Manfred then immediately seeks out Hippolita, who is still talking to Jerome at the church. As they have done so several times already, Manfred and Jerome engage in a verbal tussle about whether Jerome’s religious authority supersedes Manfred’s political authority. Manfred, claiming to know the procedures for divorce better than Jerome, leads Hippolita away to speak with her privately. But before he leaves, he secretly orders one of his spies to remain in the church.
Manfred is still unable to recognize the authority of the divine over the worldly, and refuses to recognize any authority that Jerome, as a priest, might have. Meanwhile, Manfred treats the Church as a political entity rather than a spiritual one when he leaves a spy within it.