- In Olivia's garden, Toby and Aguecheek hang out with Fabian, who worries that he'll get in trouble again if he helps them trick Malvolio. Seems Malvolio told on Fabian earlier for holding a bear-baiting contest at Olivia's place. (Bear-baiting was a popular Elizabethan blood sport, where bears were tied up to a stake and forced to fight unleashed dogs.)
- Toby Belch says not to worry—they'll make Malvolio pay for being such a drag.
- Maria enters and tells the men Malvolio has been hanging out alone practicing acting super cool for the past half hour.
- Now he's headed this way, and she knows the letter she wrote is going to make him act like an even bigger fool. She tells everyone to hide behind a tree and put the letter on the ground for Malvolio to find.
- Malvolio enters the garden talking to himself. First he says he thinks Maria wants him and then he fantasizes about being married to Olivia, which would make him a Count who could boss around Sir Toby and his raucous little crew. Toby and Aguecheek can hardly contain their laughter and their anger at Malvolio's audacity.
- The fantasy continues as Malvolio daydreams about fondling some expensive jewels and lecturing Toby for his drunkenness.
- Malvolio finds the letter and thinks right away that it's written in Olivia's handwriting. He thinks the letter is meant for him because it spells out M-A-O-I, all letters that appear in the name Malvolio. (Boy, that's some cracker-jack detective work.)
- The letter instructs Malvolio to pick fights with Toby and company, wear yellow stockings with cross-garters, and smile at everything, even when Olivia's in a sad mood. Malvolio is all over this and runs off to change his clothes.
- Toby is psyched – Maria's plot is so clever that he's tempted to marry her.
- Maria enters and gloats about her evil genius plan. Malvolio is sure to make a fool of himself while annoying Olivia to no end.