Galavant, Princess Isabella, and Sid are continuing on  their journey and decide to stop to rest. The find themselves in Sid's home town, where Sid is regarded as a hero.

Sid's parents believe that Sid is a knight and that Galavant is his squire.

At the castle, King Richard has written some inappropriate jokes about Valencia for the jester to perform. No one is enjoying themselves (obviously) and King Richard asks them all what they used to do for fun. The eunuch says he used to have balls, which the King finds hilarious. He then tells everyone to "take a whack" at the eunuch.

King Richard then decides he will try to cheer up the Valencians by hosting a ball. Madelena says she will work privately with the jester in the bedchamber.

Princess Isabelle lies to Sid's parents and says they are engaged.

Galavant talks to the squires, who discuss how dislikable knights are (in song). Galavant finds himself singing along and realizes he is just as terrible as they say.

The King's ball is completely misguided. King Richard finally yells for everyone to stop, and asks them to use one word to describe the ball. They start making fun of him. The eunuch yells out, "he’d have to be blind not to know that his wife’s getting it on with the jester.” Everyone falls silent, and King Richard tells Gareth to kill the eunuch.

Galavant talks with Sid, telling him that he should be proud of who he is.