As often happens in third acts, we find that it is a hot afternoon. Benvolio and Mercutio are hanging out as usual, trading insults and mocking the Capulets. Trouble materializes in the form of Tybalt, who is trying to find Romeo so he can get back at him for crashing the Capulet party.
Tybalt provokes Mercutio by saying "Mercutio, thou consortest with Romeo," which means "You're a known associate/friend of Romeo." It also implies that Romeo and Mercutio are sleeping together.
Mercutio responds that he's going to make Tybalt "dance" with his "fiddlestick" (his sword) and yes, there's a sexual innuendo at work here, swords being phallic symbols and all.
Benvolio, who wants everyone to be friends, warns the guys not to fight in public.
Romeo, just married, walks obliviously into the middle of this tense situation. Tybalt calls Romeo a villain, which was a HUGE insult back then.
But Romeo remembers that Tybalt is his new wife's cousin, so he turns the other cheek. Well, not literally, but he does refuse to fight.
Mercutio is shocked by Romeo's behavior – Romeo has totally dishonored himself by taking that insult sitting down.
Mercutio is so upset at Romeo's cowardice that he offers to fight Tybalt instead.
Romeo tries to stop them, but Mercutio and Tybalt ignore him.
As they are fighting, Romeo rushes in and tries to hold Mercutio back.
Bad move. While he's doing so, Tybalt stabs Mercutio and runs away.
Romeo and Benvolio assume that Mercutio hasn't been badly hurt because he starts joking about his wound.
But as is often the case, Mercutio uses humor to lessen pain.
Mercutio, as it turns out, is dying. "A plague on both your houses," he cries out. Then he turns to Romeo, his best friend, and says, "Why the devil came you between us? I was hurt under your arm," he says. A minute later, he is dead.
Romeo thinks he is to blame for Mercutio's death and laments that his love for "sweet Juliet" "hath made [him] effeminate" [a girly wimp].
Crazy with grief, Romeo challenges Tybalt to a duel and kills him. His best friend dead, and his wife's cousin murdered, Romeo cries out, "O, I am fortune's fool."
Benvolio tells him to run away before the Prince captures him. Romeo takes his friend's advice.
All the citizens of Verona miraculously show up at the scene of the duel.
The Prince arrives and is understandably angry. Remember his declaration that those caught fighting would die?
The Prince commands Benvolio to explain what happened.
Lady Capulet, weeping over Tybalt's body, demands that Romeo be put to death for Tybalt's murder.
Lord Montague argues that Tybalt got what was coming to him for killing Mercutio.
The Prince decides that, because Tybalt started the fight, he will spare Romeo's life. But he rules that Romeo must be banished from Verona.