The King and his advisers meet at Windsor. The King says that in the future he is going to be tougher and more decisive. He thinks others have not been treating him with sufficient respect. Worcester tries to protest, but the King orders him to leave the meeting. He believes Worcester to be disloyal.
After Worcester leaves, Northumberland explains that the King received a misleading report about Hotspur's refusal to hand over his prisoners. (Northumberland is Hotspur's father, so naturally he tries to defend him.) Hotspur then speaks for himself. He says that immediately after the battle he was approached by a foppish man with a lot of annoying airs and graces. The man insulted his soldiers and then demanded he hand over his prisoners on behalf of the King. This made Hotspur angry. Hotspur now tells the King he cannot remember exactly what he said about the prisoners, but he hopes the accusation-of refusing to hand them over-will not damage relations between them.
Sir Walter Blunt asks that the King accept Hotspur's explanation, but the King is not satisfied. He goes on to another matter concerning Hotspur-Hotspur's request that the King pay a ransom to win the release of Mortimer, Hotspur's brother-in-law. But the King is in no mood to agree to this. He has a low opinion of Mortimer, and he has also been informed that Mortimer has married the daughter of Owen Glendower, his captor. The King calls Mortimer a traitor, and refuses to offer ransom. He adds that he cannot regard any man who asks him to do so (as Hotspur has done) as a friend.
Hotspur bridles at the suggestion that Mortimer is a traitor, and tells of how valiantly he fought against Glendower. The King retorts that Hotspur misrepresents the facts; Mortimer never fought with Glendower. The King tells Hotspur not to mention Mortimer again and demands that Hotspur send him his prisoners with all speed. He threatens him with retaliation if he refuses.
The King exits, with Blunt. Alone with his father, Hotspur says he will never hand over his prisoners. His father rebukes him. Then Worcester enters, but before he can speak, Hotspur says he will do everything in his power to free Mortimer. He also expresses his deep dislike of the King. Hotspur explains the situation to Worcester, who says it is not surprising that the King is antagonistic toward Mortimer, since the former king, Richard II, whom Henry IV overthrew, declared that Mortimer was next in line to the throne.
Hotspur then gives vent to his anger against the King and rebukes Northumberland and Worcester for joining with the King to overthrow Richard. But worse, he rebukes them for putting up with the contempt of the man they helped to place in power. The King is in their debt, yet according to Hotspur he spends all his time plotting as to how he can get rid of them.
Worcester attempts to get Hotspur to listen to a plan he has, but Hotspur is so excited he will not stop talking. He rants about honor and says he will not give up a single prisoner and will dedicate his life to bringing down the King and his son.
Northumberland rebukes his son for his outburst. But Hotspur does not apologize. Instead, he continues in the same vein. He recalls the first time he met the King, in King Richard's time. The meeting was in Yorkshire, when Henry IV was still named Bolingbroke. Bolingbroke had spoken sweetly to him, but Hotspur curses the memory of it.
Hotspur has finally said all he has to say, and this gives Worcester the opportunity to explain his plan. He tells Hotspur to release his Scottish prisoners back to Douglas, the Scottish leader, without any ransom money, and make an alliance with him. Worcester then tells Northumberland to make an alliance with the Archbishop of York. Worcester knows that the Archbishop still grieves for his brother, who was executed by Henry IV, and is likely to want to join a rebellion. Hotspur then fills in the rest of the plot, realizing that Douglas can join up with Mortimer's and Glendower's forces and then they will all unite against the King. Hotspur and Northumberland enthusiastically support the plan. Worcester explains how necessary it is: the King knows he is indebted to them because they helped him win power, and he must also know they are dissatisfied with the way he is treating them. Therefore he will eventually do away with them unless they act first. Hotspur looks forward to the coming battle.
The scene shows a king comfortable in the exercise of his power and prepared to be ruthless in dealing with his rivals and potential enemies. But the real interest in this scene is what it reveals about the character of Hotspur. He shows himself to be passionate, excitable, and impetuous, with romantic ideas about honor. He does not do things by half-measures, but with full and total commitment. He harbors a deep hostility to the King and contempt for Prince Hal (with whom he is contrasted throughout the play). It is clear that he will make a formidable opponent for the King, although the fact that he is reluctant to listen to the advice of his elders suggests a flaw that may cost him dearly later.