Kent, banished in the previous scene, returns in disguise. When Lear asks what he is, he says: "I do profess to be no less than I seem": a man who can deliver a plain message bluntly, whose best quality is diligence. Lear hires him without recognising him. It is a small, pointed irony: the king who cannot see his daughters clearly cannot see his most loyal servant either.
The Fool enters and begins working. He offers Kent his jester's cap for taking the part of a man out of favour. Then, to Lear directly: "this fellow has banished two on's daughters, and did the third a blessing against his will." Every joke is a diagnosis. When Lear asks if he is calling him a fool, the Fool replies: "All thy other titles thou hast given away, that thou wast born with." Lear calls him bitter. The Fool keeps going.
The neglect Goneril ordered is already visible. Oswald ignores Lear when called. A knight reports that the whole household has grown cold. Lear admits he has "perceived a most faint neglect of late," which he had tried to explain away as his own oversensitivity. He can no longer.
Goneril enters and delivers her complaint: his knights are riotous, his fool is insolent, his retinue turns her palace into a tavern. She demands he reduce his followers. Lear's response is one of the scene's pivotal moments: not just rage, but the beginning of bewilderment. "Doth any here know me?" he asks. "This is not Lear; doth Lear walk thus? speak thus? Where are his eyes?" The Fool answers quietly: "Lear's shadow."
He then unleashes a curse on Goneril: calling on nature to make her sterile, or if she must have a child, to make it a torment to her. Then comes the line that catches him: he remembers Cordelia. "O most small fault, how ugly didst thou in Cordelia show!" He struck at her for the same honesty Goneril is now punishing him for. He strikes his own head.
He leaves for Regan's. Before going, he learns fifty of his knights have already been dismissed. He is losing ground faster than he understood.
Goneril, unmoved, tells Albany the hundred knights are a political threat. Albany warns she may be pushing too hard. Goneril dismisses this as "milky gentleness", and sends her letter to Regan.