While his brother Antonio tries to console him, Leonato grieves at the villainy that has ruined his daughter's reputation. When Claudio and Don Pedro appear, trying to leave Leonato's estate, Leonato accuses Claudio of falsely denouncing Hero and, thus, of having caused her death. He challenges Claudio to a duel in spite of their difference in age and their differing abilities with the sword. Antonio heatedly backs Leonato up. Don Pedro maintains that the accusation against Hero was true, and Leonato and Antonio leave them in disgust.
Benedick arrives, and Claudio and Don Pedro tell him about the foolhardy challenge by Leonato and Antonio. Benedick ignores their lighthearted talk. They try to engage his humor by talking about Beatrice, but he continues to ignore their chatter. He then accuses Claudio of having killed Hero by his humiliation of her and challenges him to a duel. He tells Don Pedro that he will no longer be a member of his company and that Don John has run away. Benedick repeats his challenge to Claudio and leaves. They are disconcerted by Benedick's words and his challenge.
Just then, Dogberry and Verges bring in their prisoners in preparation for meeting with Leonato as governor and judge. Don Pedro, recognizing his brother's followers, tries to find out from Dogberry what Borachio and Conrade have done wrong. Borachio himself, with expressions of regret and shame, finally explains Don John's plot against the marriage of Hero and Claudio, and admits it was Margaret and himself in the window — not Hero and another lover. Don Pedro and Claudio are stunned at this news, realizing that Hero was innocent and therefore falsely accused by them.
Leonato and Antonio appear with the sexton. Leonato first confronts Borachio, who readily admits his wrongdoing. Leonato then confronts Claudio and Don Pedro, accusing them of having caused Hero's death. He commands them to tell everyone in Messina that she was falsely denounced and demands that they appear at her tomb that very night. Claudio is to hang an epitaph upon the tomb, singing it "to her bones." Claudio agrees to marry Antonio's daughter the next day, although he has never heard of nor seen her before.
Leonato has one more task to undertake — to find Margaret and find out if she knew she was participating in this horrible plot. Borachio defends Margaret, saying she did not know she was doing anything wrong.
Dogberry makes a final complaint to Leonato about Conrade's calling him an ass. Leonato thanks him for his efforts and asks him to leave the prisoners with him so they can confront Margaret. Dogberry and Verges leave.
Claudio promises to mourn at Hero's tomb that night, and he and Don Pedro leave. Leonato leads the prisoners away to talk with Margaret.
Several plot threads are brought together in this scene of frequent arrivals and departures. The several parts of the scene are even more complex when we remember that each person's words and actions are based on differing knowledge of the facts.
At the beginning of the scene, Leonato and Antonio do not know about Don John's plot, but they are certain that Claudio and Don Pedro falsely accused Hero and that her reputation is forever ruined. They know she is not dead but are prepared to say that she is.
When Claudio and Don Pedro appear, they still think that they saw Hero being unfaithful and she was therefore justly accused. They are surprised to learn of her "death" but don't see it as their fault.
When Benedick arrives, he does not know the details of the plot but feels sure Claudio and Don Pedro were set up by Don John. He also pretends that Hero is dead. He doesn't see any humor in his friends' jokes and comments.
When Dogberry and Verges arrive, they know (in their unique way) about the plot set up by Don John, and they know that Borachio carried it out. They think Hero is dead, having been so informed by the sexton during the examination of the prisoners.
When Borachio confesses his part in the scene with Margaret, Claudio and Don Pedro are now fully informed about the plot but still think Hero dead, as does Borachio. Notice that Borachio puts all the blame on Don John, although Borachio himself suggested the window scene.
When Leonato and Antonio return, they too learn the details of Don John's plot and are the only ones with full knowledge of all the facts, including, of course, their own deception about Hero's death, Claudio's grieving, and Claudio's immediate acceptance of Antonio's daughter in marriage. Consistent with his gullibility and quick changes of heart, Claudio rationalizes his denunciation, saying he "sinned not" but made a mistake.
Dogberry's statement of the misdeeds by Borachio and Conrade is a masterpiece of unintentional redundancy: They have "committed false report," "spoken untruths," slandered, "belied a lady," "verified unjust things," and behaved as "lying knaves." Notice too the sequence of Dogberry's enumeration of these offenses: "secondarily," "sixth and lastly," "thirdly," and "to conclude." Then note how Don Pedro mocks him: "First," "thirdly," "sixth and lastly," and "to conclude." Claudio points out that the accusations all boil down to one offense.
Dogberry is still smarting from Conrade's insult in the preceding scene, calling him "an ass." After Borachio's confession to Claudio and Don Pedro, Dogberry reminds them of the insult. Later, he tells Leonato of the insult and asks that "it be remembered in his [Conrade's] punishment."
When Margaret participated in the window scene, it was never clear why she would deceive her mistress. In this scene, Borachio graciously clears Margaret for her part in the scene (is he sincerely in love with Margaret?), although Leonato still wishes to confront her about it.