Several weeks later, a crowd of Mrs. Peniston’s relatives gathers in her drawing room for the reading of her will. Grace Stepney, Mrs. Peniston’s "dear cousin and name-sake," shows real grief at the old lady’s death. Everyone else looks bored. Most assume that Miss Lily Bart will inherit the entire estate.

The door opens, and Lily appears with her friend Gerty Farish. Nobody snubs Lily outright, but her reception is cool. Lily chooses a seat apart from the others and reflects that life will be easier when she has Mrs. Peniston's money. Lily has not lived down the scandal caused by Mrs. Dorset's betrayal, but nobody shuns a rich woman.

A lawyer begins the reading of the will, which includes a long list of people to receive small bequests of money. As their names are read, Lily is surprised to hear her own: Mrs. Peniston has bequeathed her only ten thousand dollars. Moments later, everyone learns that the bulk of the estate will go to Miss Grace Stepney.

As soon as the will has been read, everyone rushes to Grace to congratulate her. Lily watches the crowd for a while and congratulates Grace herself. As she does so, people stare at Lily with open disgust. Now that they know she will remain poor, they are not afraid to be cruel.

Later, Gerty Farish begs Lily to explain what happened with the Dorsets in Europe. Lily refuses to tell the story; a girl, she says, just looks guiltier if she tries to explain away her role in a scandal. She says that people will believe what they want to believe:

In this case it’s a great deal easier to believe Bertha Dorset’s story than mine, because she has a big house and an opera box, and it’s convenient to be on good terms with her.

Soon after this conversation, Lily has a chance encounter with a group of women she has always considered friends. All of them, including Mrs. Trenor and Mrs. Fisher, act cold and unwelcoming. They do not give Lily an opportunity to explain herself, and they do not invite her to visit them. As Lily predicted, they are siding with Mrs. Dorset's money, leaving Lily on her own.

Lily knows it is going to be difficult for her to survive from now on. Back in New York, she feels a renewed need to repay her debt to Mr. Trenor; she finds it a "humorous coincidence" that she received from her aunt almost the exact amount she owes him. She is eager to pay him and put the matter behind her, but she soon learns that it will take as long as a year to receive the ten-thousand-dollar check from Mrs. Peniston's estate.

Swallowing her pride, Lily goes to Grace Stepney to ask for a loan. Grace refuses, explaining that she has not yet received any of Mrs. Peniston’s money. When Lily begs Grace for a loan, Grace turns nasty and throws Lily out.