The Lord Chamberlain is reading a letter from one of his employees. The letter tells how Wolsey's man stole some horses from him that he had purchased on the Lord Chamberlain's behalf, declaring that his master (Wolsey) should have them, rather than a mere subject, or even the king himself. The Lord Chamberlain believes that Wolsey will take everything from the nobles to enrich himself.
The Dukes of Norfolk and Suffolk enter. Suffolk asks after the king, and the Lord Chamberlain says he is troubled in his conscience because he married his brother's wife (Katherine had been married to Henry's older brother Arthur until Arthur died, when she married Henry). Suffolk privately thinks that it is less a matter of conscience than the king's attraction to another woman (Anne Bullen). Norfolk says this is Wolsey's doing. He is amazed that Wolsey has so efficiently managed to break the alliance between Charles V and King Henry, and to make the King doubt the legality of his marriage of twenty years to his loving and virtuous wife, Katherine.
The Lord Chamberlain says that people everywhere are talking of this, and that they are sad at the news. He says that Wolsey has engineered the situation in order to arrange a marriage between King Henry and the French king's sister. He predicts that one day, God will open the king's eyes so that he can see Wolsey for who he is. Norfolk and Suffolk agree that Wolsey is too proud.
Norfolk and Suffolk visit the king, with the aim of distracting him from his sad thoughts. When they find him, he is angry at being disturbed. Then Wolsey comes in with Campeius. The king welcomes Wolsey as "The quiet of my wounded conscience" (line 74). Wolsey asks the king to give him and Campeius an hour of private conference. The king abruptly dismisses Norfolk and Suffolk. As they leave, they mutter threateningly about Wolsey.
Wolsey tells the king that no one could object to his separating from Katherine because the king has consulted all the learned clergy of Christendom, including the Pope, who has sent Campeius as his envoy. The king agrees that Katherine should have the best scholars to argue for her. He asks for Gardiner, his new secretary, who was previously employed by Wolsey, to be sent in. As Gardiner enters, he assures Wolsey, in an aside, that his loyalty is still to him.
Campeius asks Wolsey about Dr Pace, the man who occupied Gardiner's position before him. Campeius tells Wolsey that there are rumors that Wolsey was envious of him and kept him in foreign posts until he went mad with grief and died. Wolsey dismisses Pace as a virtuous fool.
The king says that he will go to Blackfriars to announce his decision to leave Katherine. He is sorry to leave "so sweet a bedfellow," but his conscience demands it.
Wolsey's unscrupulous character is further built on in this scene. The episode where Wolsey is reported to have stolen the Lord Chamberlain's horses reinforces what we have learned about his greed and lack of scruple. There was never anything noble or worthy about a horse-thief. In addition, Campeius's account of Wolsey's keeping the previous royal secretary in foreign posts due to envy backs up Wolsey's reputation as a self-promoting schemer. Even Norfolk, who previously had taken a conciliatory attitude towards Wolsey, has now lost patience with him.
The king is revealed as deluded. He rudely dismisses Norfolk and Suffolk, who are genuinely interested in his welfare, yet welcomes Wolsey as "The quiet of my wounded conscience" and "a cure fit for a king" (lines 74-5). This praise of Wolsey has dramatic irony (i.e. the audience/reader spots the irony, but the character who utters it is blind to it) in that we know that it was Wolsey who, for his own ends, first introduced doubts into the king's mind about the legality of his marriage to Katherine.
In Shakespeare's plays, the question, "Who am I?" always has deep significance. When the king utters it (line 66), superficially, he is asking Norfolk and Suffolk how they dare disturb a king, but the question has resonance beyond this. He has wrongly allowed his supreme and God-given authority as king to be encroached upon by Wolsey, who ultimately cares only about himself. At the same time, he dismisses his loyal friends, Suffolk and Norfolk. Thus he has lost sight of who he is.
Though Campeius has brought the Pope's decision on what Henry can or should do about his marriage, it plays little part in what follows. Henry has already made his decision to divorce Katherine, as is made clear by his speech at the end of the scene.