Basil and Henry return to the house, where they find Dorian at the piano. He's startled to see that there's someone else there. Basil introduces his two friends.
Lord Henry brings up their other mutual acquaintance, his Aunt Agatha. While he chats politely with Dorian, he notices just how splendid the boy's looks are—there's something about him that's totally innocent and pure.
Basil is distracted by Henry and Dorian's conversation—he's worried about what his old friend will say to influence his new one. He asks Henry to leave, but Dorian raises a fuss begs him to stay.
Basil gives in and allows Henry to stay, but warns Dorian (not entirely jokingly) not to listen to everything Henry says, since he's a bad influence over everyone except Basil himself.
Dorian has taken a liking to Henry already—he's charmed by how different the young lord is from his friend.
As Dorian poses for the painting, Henry takes it upon himself to enlighten the boy; he launches into a long explanation of his own decadent values, basically claiming that any form of influence is a bad influence, and that people should try to live their lives fully and give into their impulses.
Dorian is shocked by all this, and Basil, who's wrapped up in his painting, notices a new look in the boy's face for the first time.
Henry continues his diatribe about returning to the Hellenic (ancient Greek) mode of life, in which everyone yields to all of their desires and temptations. He suggests daringly that even Dorian, whose youthful innocence is complete, has secret desires that he won't even admit to himself. This is too much for the boy, and he demands silence so he can think things through.
The provocative, challenging words of Lord Henry resonate mysteriously within Dorian's soul, and he's not quite sure what's happening to him. All of a sudden, it seems as though his whole life has changed, and things that he didn't even recognize in himself before come to life.
As Dorian ponders the meaning of this conversation, Henry looks on, intrigued and pleased—he knows his words have hit close to home. Meanwhile, Basil, in a painting trance, works in silence, not noticing what's happening between his two friends.
Dorian breaks from his pose, and demands some rest—Basil lets him go, commenting that whatever Henry was saying to Dorian must have been working, because he posed beautifully.
Henry follows Dorian to the garden, where he finds the boy desperately trying to calm himself down via aromatherapy with some lilacs. Henry approves of this—he thinks the best way to calm the soul is to appeal to the senses, and vice versa.
Dorian is disturbed by the effect Lord Henry has on him, and a little afraid of him—but he's deeply intrigued by the other man.
Henry warns Dorian not to get sunburnt, telling the boy that he should value his youth and exceptional beauty. He explains that to him, Beauty is the most important and valuable thing in the whole world—but that it's transient, and Dorian should enjoy it while he can.
Basil calls his friends back into the studio, and as they go into the house, they confirm their new friendship.
Dorian gets back into picture pose, and Basil continues his work—soon enough, he's actually done with the painting. Henry comes over to admire it exuberantly, and calls Dorian over.
Dorian is overjoyed by the recognition of his own beauty; Lord Henry's words opened his eyes for the first time to just how gorgeous he is. This just makes him afraid of the day when he'll grow old and lose his beauty, and he breaks down in tears.
Basil doesn't understand Dorian's reaction, and asks if he doesn't like it.
Lord Henry tries to make Basil feel better, and asks to buy the painting—but Basil says it already belongs to Dorian.
Dorian explains his sadness in seeing the beauty of the portrait. He can't believe that he himself will grow older every day, but the painting will never age, and he wishes it was the other way around—why can't the painting age as he stays the same? He says he would give his soul to have this wish come true.
Henry jokes that Basil wouldn't like this arrangement, as it would reflect poorly upon his own work. Dorian responds too seriously that it's true—Basil likes his work better than his real friends.
Dorian goes on rather madly, saying that Basil only cares for his youth and beauty, and that the day he grows old and ugly, he'll kill himself. Basil is horrified, and blames Henry for this change in Dorian; Henry, however, responds that it's the real Dorian who's emerged.
Basil turns on the painting, the cause of this argument between him and his best friends. He attempts to slash the canvas, but Dorian stops him, saying that he's in love with this image of himself.
Everyone calms down, and it seems that the moment of high drama is over. Everyone settles down, and, like good Englishmen, the three settle down for a cup of tea.
Lord Henry proposes that they all go to the theatre that night. Dorian is all up for it, but Basil says he has to stay home and work—he sadly comments that he'll stay with the "real" Dorian, the innocent one in the painting.
Basil begs Dorian not to go to the theatre with Lord Henry, but the boy says that he must. We get the feeling that this is rather more symbolic than it seems—will he stay back with Basil and his old self, or will he go out with Lord Henry, and perhaps come back a different person?...
Dorian and Henry leave Basil in the studio, alone and pained.