Ponyboy wanders the hospital and then the streets. Eventually, a concerned stranger offers to drive him home. At home, Ponyboy tells the other greasers about Johnny's death and Dally's disappearance. The phone rings. Darry picks up the phone—it's Dally. He tells Darry the that he's just robbed a grocery store and is on the run from the police and needs help. The boys hurry to the vacant lot to pick Dally up. Through all this, Ponyboy dizziness and weakness intensifies.
None of the greasers are surprised that Dally has become self-destructive after Johnny's death, because Johnny was the only thing that Dally loved and valued in his life. Yet notice how the greasers immediately drop everything to try to help Dally.
The boys reach the vacant lot just as Dally does. Simultaneously, a police car pulls up across the street. Dally pulls out a gun that his friends know he keeps unloaded and uses as a bluff in fights. But the police don't know the gun isn't loaded. They shoot Dally, killing him. Ponyboy realizes that Dally wanted to die.
Ponyboy remembers all of the good things that Dally did to protect and help his fellow greasers. Ponyboy also reflects on how anyone who isn't a greaser and doesn't know Dally personally won't ever know about all of Dally's selfless actions. Then Ponyboy passes out.
Ponyboy is developing an independent point of view: Dally's tragedy is partially of Dally's own making, but also comes from society's insistence on seeing Dally only as a hoodlum
Ponyboy wakes up at home. He learns from Darry and Sodapop that he suffered a concussion during the rumble and that he was delirious in the hospital and then unconscious for three days, and that they stayed by his bedside nearly the entire time.
The mutual care and concern among the Curtis boys is evident here.
Ponyboy also learns that Johnny left him his copy of Gone with the Wind, but the book and its Southern gentlemen remind him of Dally and he decides never to finish it.
In avoiding reading Gone with the Wind Pony is trying to avoid the deaths of Johnny and Dally, rather than acknowledge them.