Bilbo wakes up in such darkness that he cannot tell by looking whether his eyes are open or shut. He knows he is in a goblin cave, but he does not remember how he came to be knocked out or why he has been left behind. He crawls through the dark and puts his hand on something small and round—a ring. He puts it in his pocket. Then he sits down and smokes his pipe and looks at his blade, which he sees is glowing faintly blue. This, he knows by now, means that it is an elvish blade, and it gives him a little hope. He determines that there is nothing to do but go on.

Slowly, Bilbo makes his way down a path through the darkness. After a long walk, he comes to a dark underground lake, where he meets a small, slimy creature called Gollum. Gollum takes one look at Bilbo and decides that he would make a wonderful meal. However, he is not particularly hungry and he sees that Bilbo is armed, so he decides to be cautious. He suggests a game of riddles; he thinks this will give him time to figure out whether Bilbo can defend himself. Bilbo agrees; he thinks the game will give him time to determine whether Gollum is dangerous. If Bilbo wins, Gollum will show Bilbo the way out of the cave.

Gollum and Bilbo exchange several riddles. By luck, cleverness, and some knowledge of the same sorts of riddles, they each keep getting the correct answers. Gollum’s riddles become darker and more centered on eating, which makes Bilbo nervous. Finally Bilbo cannot think of another riddle. He puts a hand in his pocket and feels the ring. “What have I got in my pocket?” he asks. Gollum thinks this is a riddle. He protests that he cannot know the answer, but he guesses three times and fails to get the answer. Bilbo demands to be shown the way out, and Gollum pretends to give in—but first, he says, he has to go and fetch something.

Gollum wants to get his precious ring, a ring of power that turns him invisible. He plans to sneak up to Bilbo while wearing the ring and kill him. He goes home to a little island where he lives and tries to find it, but the ring is gone. Gollum howls in anger and returns to Bilbo, now suspecting that Bilbo has the ring. When Gollum grows increasingly angry, Bilbo gets scared and runs away. He slips the ring on his finger, and he is surprised to see Gollum bound past him as if he is not there. After some reflection, Bilbo realizes that the ring makes him invisible. He decides to follow Gollum.

Gollum suspects that if Bilbo knew the way in, he must know the way out, so he hurries toward the “back door,” unwittingly leading Bilbo to the cave’s exit. He crouches to wait in Bilbo’s path, blocking the way out. Bilbo wants to kill him. Then he imagines a life alone in the darkness and takes pity on the creature. He takes a running start, leaps over Gollum’s head, and runs toward freedom. When Gollum realizes that he cannot catch Bilbo and has lost his precious ring, he howls in sorrow and fury. Bilbo sees an open doorway in front of him, but it is in a room guarded by many goblins. He dodges among them and then finally squeezes through the door.