Higgins is about to really offend the company with a theory that they are all savages who know nothing about being civilized when Eliza is announced. She makes quite an impact on everyone with her studied grace and sophisticated speech. Everything promises to go well until Mrs. Eynsford Hill brings up the subject of influenza, which causes Eliza to launch into the topic of her aunt, who supposedly died of influenza. In her excitement, her old accent, along with shocking facts such as her father's alcoholism, slip out. Freddy thinks that she is merely affecting "the new small talk," and is dazzled by how well she does it. He is obviously infatuated with her. When Eliza gets up to leave, he offers to walk her but she exclaims that there's no way she'll walk home and that she will go by taxi. The Hills leave immediately after her. Clara, Miss Eynsford Hill, is taken with Eliza, and tries to imitate her speech. 

After the guests leave, Mrs. Higgins chides Higgins. She says there is no way Eliza will become presentable as long as she lives with the constantly swearing Higgins. She demands to know the precise conditions under which Eliza is living with the two old bachelors. She is prompted to say, "You certainly are a pretty pair of babies, playing with your live doll," which is only the first of a series of such criticisms she makes of Higgins and Pickering. They simultaneously give her accounts of Eliza's improvement until she tells them to remain quiet. She tries to explain to them  that there will be a problem of what to do with Eliza once everything is over, but the two men pay no heed. They take their leave, and Mrs. Higgins is left exasperated by the "infinite stupidity" of men. 

The trio return to Higgins Wimpole Street laboratory, exhausted from the night's happenings. They talk about the evening and their great success at the Ambassador’s party and how Eliza had convinced everyone of her high pedigree, though Higgins seems rather bored, more concerned with his inability to find slippers. While he talks absentmindedly with Pickering, Eliza slips out, returns with his slippers, and lays them on the floor before him without a word. When he notices them, he thinks that they appeared out of nowhere. Higgins and Pickering begin to speak as if Eliza is not there with them, saying how happy they are that the entire experiment is over, agreeing that it had become rather boring in the last few months. The two of them then leave the room to go to bed. Eliza is clearly hurt, but Higgins and Pickering are oblivious to her. 

Higgins pops back in, once again mystified over what he has done with his slippers, and Eliza promptly flings them in his face. Eliza is mad enough to kill him; she thinks that she is no more important to him than his slippers. At Higgins' retort that she is presumptuous and ungrateful, she answers that no one has treated her badly, but that she is still left confused about what is to happen to her now that the bet has been won. Higgins says that she can always get married or open that flower shop (both of which she eventually does), but she replies by saying that she wishes she had been left where she was before. She goes on to ask whether her clothes belong to her, meaning what can she take away with her without being accused of thievery. Higgins is genuinely hurt, something that does not happen to him often. She returns him a ring he bought for her, but he throws it into the fireplace. After he leaves, she finds it again, but then leaves it on the dessert stand and departs. 

Higgins and Pickering show up the next day at Mrs. Higgins' home in a state of distraction because Eliza has run away. Alfred Dolittle, who enters resplendently dressed, as if he were the bridegroom of a very fashionable wedding, interrupts them. He has come to take issue with Henry Higgins for destroying his happiness. It turns out that Higgins wrote a letter to a millionaire jokingly recommending Doolittle as a most original moralist, so that in his will the millionaire leaves Doolittle a share in his trust, amounting to three thousand pounds a year, provided that he lecture for the Wannafeller Moral Reform World League. Newfound wealth has only brought him more pain than pleasure, as long lost relatives emerge asking to be fed, not to mention that he is now no longer free to behave in his casual, slovenly, dustman ways. He has been damned by "middle class morality." The talk degenerates into a squabble over who owns Eliza, Higgins or her father since Higgins did give the latter five pounds for her after all. To stop them, Mrs. Higgins sends for Eliza, who has been upstairs all along. But first she tells Doolittle to step out on the balcony so that the she will not be shocked by the story of his new fortune.

When she enters, Eliza takes care to behave very civilly. Pickering tells her she must not think of herself as an experiment, and she expresses her gratitude to him. She says that even though Higgins was the one who trained the flower girl to become a duchess, Pickering always treated her like a duchess, even when she was a flower girl. His treatment of her taught her not phonetics, but self-respect. Higgins is speaking incorrigibly harshly to her when her father reappears, surprising her badly. He tells her that he is all dressed up because he is on his way to get married to his  woman. Pickering and Mrs. Higgins are asked to come along. Higgins and Eliza are finally left alone while the rest go off to get ready.

They proceed to quarrel. Higgins claims that while he may treat her badly, he is at least fair in that he has never treated anyone else differently. He tells her she should come back with him just for the fun of it--he will adopt her as a daughter, or she can marry Pickering. She swings around and cries that she won't even marry Higgins if he asks. She mentions that Freddy has been writing her love letters, but Higgins immediately dismisses him as a fool. She says that she will marry Freddy, and that the two will support themselves by taking Higgins' phonetic methods to his chief rival, Nepommuck. Higgins is outraged but cannot help wondering at her character--he finds this defiance much more appealing than the submissiveness of the slippers-fetcher. Mrs. Higgins comes in to tell Eliza it is time to leave. As she is about to exit, Higgins tells her offhandedly to fetch him some gloves, ties, ham, and cheese while she is out. She replies ambivalently and departs; we do not know if she will follow his orders. The play ends with Higgins's roaring laughter as he says to his mother, "She's going to marry Freddy. Ha ha! Freddy! Freddy!! Ha ha ha ha ha!!!!!"

Click here for part 1 of the summary of Pygmalion