For the first time Lucius enters Hypate, the magical city of Thessaly. He brings a letter to his uncle Milo, one of the most influential people in the city. On the threshold of the house he is met by the seductive servant Fotis who leads Lucius to the guest room. After a warm welcome Lucius prepares to go to the baths, but first goes to the market to buy something for dinner, and meets his old friend Pithius, with whom he studied in Attic Athens. At the market he also meets his aunt Birren, who tells him about the city and invites him to join her in a feast.
Townspeople sit in the stands anticipating an exciting spectacle. Several scenes unfold before the astonished gaze of the spectators: the thief Alcim enters the room of a feeble old woman with plans to rob her, but she throws him out the window and he falls to his death; Venus takes care of her sick son, and, when she meets Psyche, gives her a test – to separate peas from grain and grain from barley; the ass, eating his fill of raw vegetables in someone's garden, is nearly killed by attackers, but frightens them away when he shits all over them and escapes.
The city is an immersion in the lower world, and, at the next turn, the Demon of Hell joins the journey. Lucius, in the guise of an ass, hears a story about himself – how someone robbed his uncle Milo and disappeared. "Not guilty!" the ass tries to shout, but he no longer commands human speech; that very same Gem, the leader of the bandits, reveals the secret of his success – he changes into a woman's dress and, in the guise of a woman, easily passes through the heart of enemy band on an ass; a stepmother burns with passion for her stepson and tries to persuade him to commit a terrible crime.
Finally, Lucius reaches the bathhouse he was heading for, and finds himself in true purgatory: flames flare up and billowing smoke gently inundates the townspeople's souls.
