Leonato and Antonio wonder aloud where Don John has gone. Beatrice and Hero comment about their dislike of such a melancholy and disagreeable man. Beatrice jests that a man who is a cross between Benedick and Don John would be perfect, neither too garrulous or reticent. She, like Benedick, extols the virtues of being a bachelor and condemns marriage for those with inferior wit and mental strength. Leonato tells her that he hopes that she will be happily married one day.
Day turns to night and a dance is underway. Since everyone must wear a disguise to the party, there are naturally a few misidentifications. Don Pedro escorts Hero to a secluded spot to speak with her. Balthasar, one of Don Pedro's attendants, flirts with Margaret, Hero's maid. At the same time, the gentlewoman Ursula converses with Antonio. Beatrice and Benedick are in yet another corner of the room. Beatrice cannot figure out who Benedick is under the mask, although he realizes whom he is talking with. He pretends to be someone else and Beatrice launches in a tirade of insults against Benedick, whom she supposes is somewhere else in the party. Benedick hides his hurt and rage against this gratuitous volley of insults and leaves the party.
Now, only Don John, Borachio and Claudio remain in the room. Don John addresses Claudio as Benedick, although he knows his true identity. Claudio, who is unaware of Don John's scheme, innocently plays along and pretends to indeed be Benedick. Don John tells him that Don Pedro is in love with Hero. Don John pretends that as a loving brother he opposes the union. This is, of course, entirely false, but Claudio believes it to be true. After Don John and Borachio leave, Claudio is enraged at his friend's supposed treachery. The real Benedick reenters and tells Claudio that Don Pedro has successfully persuaded Hero to marriage. Claudio erroneously believes that Benedick is talking about Don Pedro and Hero's marriage, when the opposite is true.
Don Pedro reenters and asks Benedick about Claudio's whereabouts. Benedick tells him about the count's strange reaction to the happy news. Don Pedro vows to set Claudio straight about whom Hero will marry. Benedick then complains about Beatrice to Don Pedro. Beatrice, Claudio, Hero and Leonato join the group. Benedick, in fear of Beatrice's sharp tongue, quickly exits. Don Pedro tells Claudio the truth about Hero and Claudio is overwhelmed with joy that he will soon marry his love. Beatrice jokingly complains about want of a husband for herself, when Don Pedro promptly proposes to her. She refuses, but neither takes the situation too seriously. She leaves the room shortly after this banter.
Leonato tells everyone else that the wedding will take place in one week. In order to amuse himself for the duration of the next week, Don Pedro decides to play matchmaker between Benedick and Beatrice. Leonato, Hero and Claudio agree to help him out.