We again find ourselves inside the bunk house on the same day. George and Slim enter, in the midst of a conversation. We learn that Slim has agreed to let Lennie have one of his pups. Slim comments on what a strong worker Lennie is and George grows proud. Slim again remarks on the rarity of two guys traveling together and how funny it is that a smart guy like George would be with a "cuckoo" (43) like Lennie. George defends Lennie, saying that he isn't cuckoo, that he is dumb but not crazy. George claims that he is the dumb one: "If I was bright, if I was even a little bit smart, I'd have my own little place, an' I'd be bringin' in my own crops, 'stead of doin' all the work and not getting what comes up outta the ground" (43). George tells Slim, who invites confidence, that he knew Lennie's Aunt Clara and when she died, "Lennie just come along with me out workin'. Got kinda used to each other after a little while" (44). George goes on to confess to Slim that he used to be mean and play tricks on Lennie because he was so dumb. After realizing that Lennie would do anything for George, including drown himself, George stopped his malicious ways. George doesn't want to go around on the ranches alone because people who travel alone "don't have no fun. After a long time they get mean" (45). Despite the nuisance that Lennie can be, George admits that "you get used to goin' around with a guy an' you can't get rid of him" (45). George continues to tell Slim of the trouble that Lennie got them into in Weed when he held on to the woman's dress.
After George's private conversation with Slim, Lennie enters the bunk house and George immediately notices that Lennie has smuggled his new puppy in from the barn and is secretly petting it on his bunk. George makes him take it back, warning him that it's not good for the little puppy's health to be away from its nest, and Lennie leaves.
Candy, his old dog and Carlson enter and Carlson presses Candy about shooting his worthless dog and Candy grows defensive: "No, I couldn't do that. I had 'im too long" (49). Carlson offers to shoot the dog for Candy so that he doesn't have to watch his own dog die. Slim agrees with Carlson and offers Candy one of his pups, at which Candy grows helpless and uncomfortable because he knows and respects Slim's unarguable authority. Another young worker, Whit, enters and diverts attention for a while by talking about a former worker whose letter to the editor appeared in a magazine. But Carlson is not to be distracted. He offers to "put the old devil out of his misery right now" (52) and pulls a pistol out from underneath his bunk. Candy looks helplessly at Slim for a change in judgment, but Slim gives him none. Finally Candy, beaten, tells Carlson to take his dog and lies back on his bunk, staring at the ceiling. After anuncomfortable silence in which everyone in the bunk house waits to hear Carlson's gun, the shot sounds. We remember that Lennie has not returned from putting his pup back in the barn. After the gunshot, everyone looks toward Candy, who slowly rolls over and faces the wall.
Crooks, the Negro stable buck, appears in the doorway to tell Slim that he has warmed up some tar for the wounded foot one of Slim's mules. He also tells Slim that Lennie is "messin' around your pups out in the barn" (55). Slim assures him that Lennie is fine and the two of them leave.
This leaves Whit and George and the silent Candy alone together. Whit asks George if he's seen Curley's wife and goes on to tell her, as Candy did before, that she's got the eye: "Seems like she can't keep away from guys. An' Curley's pants is just crawlin' with ants, but they ain't nothing come of it yet" (56-57). Whit then invites George to go out to a brothel with the rest of the guys the next night, and George agrees with some hesitation, stating that him and Lennie are trying to save some money.
Carlson enters with his gun, keeping his eyes averted from Candy, who says nothing. Lennie enters with him. Curley appears immediately after them, looking for his wife. When he notices that Slim isn't in the bunkhouse, he suspects foul play between Slim and his wife, and quickly departs. Whit and Carlson follow shortly after, hoping to see a fight between Curley and Slim. George and Lennie stay, not wanting any trouble.
After some conversation, Lennie coaxes George into telling of the dream of the farm and the rabbits again. George does, and the two become enraptured by George's description of the farm, forgetting about Candy, who rolls over and listens, as fascinated as Lennie. Candy breaks in saying he knows of a place that they could buy and offers to put in some money if he is allowed to become part of George and Lennie's dream: "I ain't much good, but I could cook and tend the chickens and hoe the garden some" (65). George hesitates, but cannot refuse the three hundred and fifty dollars that Candy offers to put toward the place. All three grow confident in the approaching reality of what was once a distant dream. "We'll do her," George says, "We'll fix up that little old place an' we'll go live there" (66). The three men hear voices approaching from outside and George makes them all agree to keep their dream a secret.
Slim, Curley, Carlson, and Whit enter. Curley is apologizing to an angry Slim, who warns him: "If you can't look after your own God damn wife, what you expect me to do about it? You lay offa me" (68). Carlson joins Slim in warning Curley to look after his wife and soon Candy joins in the teasing of Curley. Curley, unable to intimidate the others, frustrated and angry, turns to Lennie, who is still smiling, imagining the ranch and his rabbits. Curley thinks Lennie is laughing at his expense, and begins to attack Lennie, punching him in the face. Lennie backs away, too scared to defend himself, while Curley bloodies his face. Lennie, terrified, begs George to make Curley stop. George tells Lennie to "get" Curley and Lennie reaches for one of Curley's swinging fists and crushes it in his own hand. Curley writhes in agony and Lennie is too scared to let go, despite George urging him to do so. After much yelling and slapping in the face on George's part, Lennie releases Curley's mangled hand. Slim tells the whimpering Curley to tell everyone that he got his hand caught in a machine: "But you jus' tell an' try to get this guy canned and we'll tell ever'body, an' then will you get the laugh" (71). Carlson takes the humiliated Curley to a doctor and Slim and George reassure the frightened Lennie that he did nothing wrong. Lennie is relieved to know that he can still tend the rabbits.