By May, Gandalf and Bilbo have made it over the Misty Mountains. They return to Rivendell, where they are greeted by happy elves once again. They rest and share stories, and Bilbo learns what else was happening in the world while he and the dwarves traveled through Mirkwood. Gandalf and a group of white wizards have fought an evil ruler, the Necromancer, and driven him from his lands in Mirkwood. From now on, Gandalf says, the lands of the North will be safer than they have been for some time. However, the Necromancer is not dead, and Gandalf knows that he is still dangerous even if he is farther away.

Gandalf and Bilbo rest and gather their strength in Rivendell, but this time Bilbo is not tempted to stay forever. He is eager to get back home. Gandalf reminds him that they still have a long journey ahead, but Bilbo says he does not mind. It is, after all, the last journey he has to make before he arrives at the place where he wants to be. As they make the trip, Bilbo looks for the places where his first few adventures occurred. He and Gandalf return to the trolls’ cave and gather the treasure there. Bilbo tries to give Gandalf his share, but Gandalf says that Bilbo may need more gold than he imagines. Eventually Bilbo accepts his half.

When at last Bilbo reaches his home, he finds it full of people. He has been declared dead, and his relatives, the Sackville-Bagginses, are trying to take ownership of his house. It takes him a great deal of time to convince people that he is indeed alive. Many of his possessions have already been sold, and Bilbo pays a great deal of money to get them back. The Sackville-Bagginses claim that the returned Bilbo is an impostor, and they are angry when they do not get to move into his hole.

Bilbo now has the respect of elves, dwarves, and wizards—but he has lost the respect of his fellow hobbits. His neighbors refuse to believe most of his stories about his adventures. They declare him a queer sort and avoid him. This does not bother him much, and he spends much of his time writing poetry and visiting elves.

One day some years later, Bilbo is working on his memoirs when he is interrupted by a knock at the door. When he goes to see who it is, he finds Gandalf and Balin on the doorstep. They give him all the news about life at the Lonely Mountain and in the rebuilt town of Dale below it, which Bard governs. The people are prospering and all is well. As they chat, Gandalf teases Bilbo gently, reminding him that he is “only quite a little fellow in a wide world.” Bilbo laughs at that and declares that he is thankful for it.