In the jail house with Doc, the soul-searching, ineffectual Sheriff considers quitting after losing his self-respect: "Let Smith find himself a new boy. I can't take it another day." He despairs about how he has been under Reno Smith's ruling sponsorship for over four years and stricken by the realization that he is unable to do his rightful job. He accepted, at face value, the story of "what happened" and was held hostage to it:

Sheriff: Four years ago, if I'd of done my job, if I'd of checked up and found out what happened. But I didn't! It was just like Smith figured...I didn't even try to find out. (He gestures toward his badge) Don't you understand? You know, when you wear this badge, you're the Law. And when somebody does something against the Law, then you're supposed to do something about it. Me - I did nothin'. That's what's eatin' me. What kind of prescription you got for that?
Doc: I don't know. I haven't found one for myself. But there's one thing, Tim, don't quit.
Sheriff: Why not?
Doc: Because maybe this feller Macreedy's got the prescription.

On a desert road through rough terrain, Macreedy drives between enormous boulders until he comes upon a flattened clearing surrounded by more rocks. In their midst are the charred remains of the farmer's burned-out ranch, a mysterious patch of lovely wildflowers, and an abandoned well. He stoops and gathers a few flower buds in his hand and pockets them. From an extreme distance, Coley spies on him through a pair of high-powered binoculars as the grim-faced Macreedy jumps into his vehicle and drives away. Coley pursues in his larger Packard sedan, following the jeep along the curvy road surrounded by rock outcroppings. Coley's heavy car overtakes Macreedy's small jeep, rams into the jeep's rear bumper, and attempts to cut him off or careen into him - to cause him to lose control and send him off the road. With one arm, Macreedy frantically maintains control on the twisting road. To avoid being killed, Macreedy swings the jeep off the road and brings it to a halt in front of some rocks. As he turns slightly in his seat, he sees Coley standing above him on the road - peering down at him by the side of his Packard.

Macreedy drives back into town and parks on the main street behind Coley's car. On the hotel's front porch, Coley stands picking his teeth with a toothpick, and contemptuously greets him, along with his cohorts Reno and Hector. The self-satisfied thug has effectively scared the one-armed man: "Well, if it's not Macreedy, the world's champion roadhog...You ought to be more careful, man - all that one-arm driving...It's a threat to life and limb...You could get yourself killed that way, nosin' all over the countryside." Inside the hotel, Macreedy tells Pete that he's ready to check out, but he is held hostage in town. There's no train until the next morning and the nearest bus stop is Sand City - thirty two miles away:

Pete: You're in such a hurry, you should've never got off here.
Macreedy: I'm inclined to agree with you.

He walks up to Liz' garage, where the jeep has been returned for him - now "the jeep's not for rent." Liz hesitantly protects the secrets of 'her' town (where "somethin' kind of bad happened"), vowing that she doesn't want to "get involved" and disturb the status quo, in a place that Macreedy believes has been forsaken by "the rule of law":

Liz: Things change.
Macreedy: Sure do. And Smith is the kid who changes 'em, isn't he?...What's wrong with this town of yours, Miss Worth?...
Liz: I don't want to get involved.
Macreedy: Involved in what?
Liz: Whatever you're up to. Whatever happens, I've got to go on living in this town. These people are my neighbors, my friends.
Macreedy: All of 'em?
Liz: This is my town, Mr. Macreedy, like it or not.
Macreedy: Well, if you don't like it, why do you stick around?
Liz: My brother Pete, he'd never leave.
Macreedy: Didn't it ever occur to you that you might leave without him? You look like a pretty independent young lady. Your brother seems to me...
Liz: Weak. Yeah, I know. That's why I couldn't leave him.
Macreedy: What did your brother do?
Liz: What do you care? What do you care about Black Rock?
Macreedy: I don't care anything about Black Rock. Only it just seems to me that there aren't many towns like this in America. But one town like it is enough and because I think somethin' kind of bad happened here, Miss Worth, somethin' I can't quite seem to find the handle to.
Liz: You don't know what you're talking about.
Macreedy: Well, I know this much. The rule of law has left here and the gorillas have taken over.

During another conversation with the suave, wary and menacing Reno outside the gas station, Macreedy learns of the self-contained town kingpin's hostility to strangers [Reno functions as a demagogue in the mold of Senator Joseph McCarthy] - and his racist, prejudicial hatred for the Japanese during the war. Smith laments how various groups use the "West" for their own purposes - historians, book writers, and business developers. Macreedy knows that he is uncovering an awful past secret in the West and is now searching for the murderer of the Japanese farmer in the midst of crazed, roughneck murderers who are camouflaging their hatred:

Smith: Why would a man like you be looking for a lousy Jap farmer?...I believe a man is as big as what'll make him mad. Nobody around here seems big enough to get you mad.
Macreedy: What makes you mad, Mr. Smith?...The Japanese make you mad, don't they?
Smith: Well, that's different. After that sneak attack on Pearl Harbor - Bataan
Macreedy: Komoko made you mad.
Smith: It's the same thing. Loyal Japanese-Americans, that's a laugh. They're all mad dogs. What about Corregidor, the death march?
Macreedy: What did Komoko have to do with Corregidor?
Smith: He was a Jap, wasn't he? Look, Mr. Macreedy, there's a law in this county about shootin' dogs. But when I see a mad dog, I don't wait for him to bite me. I swear, you're beginning to make me mad.
Macreedy: All strangers do.
Smith: No they don't. Not all of 'em. Some do when they come around snooping.
Macreedy: Snooping for what?
Smith: I don't know. Outsiders coming in looking for something.
Macreedy: Looking for what?
Smith: I don't know. Somebody's always looking for something in this part of the West. To the historians, it's the "Old West." To the book writers, it's the "Wild West." To the businessman, it's the "Undeveloped West." They say we're all poor and backward and I guess we are. We don't even have enough water. But to us, this place is our West. And I wish they'd leave us alone.
Macreedy: Leave you alone to do what?
Smith: I don't know what you mean.
Macreedy: What happened to Komoko?
Smith: He went away, I told you. Shortly after he left, some kids went out there. They got foolin' around and burned his place down. That's how it was. You know how kids are.

Macreedy laughs - suspicious of Smith's explanation: "I don't believe you." He calmly states that he found a graveyard out there: "There's somethin' buried up there....(He pulls the wildflowers from his pocket.) That means a grave. I suppose you knew that. I saw a lot of it, you know, overseas. I figured it wasn't a human grave because it wasn't marked. Kind of a mystery, isn't it?" After Macreedy has pieced together some of the puzzling clues to Komoko's death, Reno becomes increasingly antagonistic and realizes that the stranger is going to turn him in for playing a role in Komoko's disappearance. Macreedy realizes that he may not leave Black Rock alive.

In the next scene, Macreedy strolls down to Doc Velie's establishment, identified on its windows: "VETERINARY, MORTICIAN, T.R. Velie., Jr." In the alleyway next to the building, Hector leans against the wall and watches Macreedy enter the doctor's office. In the backroom, Macreedy finds Doc Velie sipping a glass of milk. Macreedy tries to telephone the state police (at "4-2-4") to report a possible crime against the missing farmer, but since the phone lines are switched through the hotel desk and controlled by Pete at the switchboard [a sign behind him reads "SMILE"], he is prevented from reaching the outside world ("the lines are all busy"). Opportunistically, Doc looks at Macreedy as a "potential customer...Everybody is - I get 'em comin' and goin'." The doctor explains how people have come out to the West with misguided dreams to try mining, farming, and other unsuccessful methods to become prosperous:

First, I sell 'em a piece of land. Do you think they farm it? They do not. They dig for gold. They rip off the topsoil of ten winding hills, then sprint in here all fog-heaved with excitement, lugging nuggets - big, bright, and shiny. (rhetorically) Is it gold? It is not. Do they quit? They do not. Then they decide to farm, farm in a country so dry that you have to prime a man before he can spit. Before you can say 'Fat Sam,' they're stalled, stranded, and starving. They become weevil-brained and buttsprung. So - I bury 'em. But why bore you with my triumphs?

Doc prophesies that Macreedy faces insurmountable problems: "They're gonna kill you with no hard feelings." Macreedy snaps back nastily: "And you're gonna sit there and let 'em do it." The cryptic-speaking Doc is usually "consumed with apathy" and feels compelled to defend his non-involvement:

I try to live right. I drink my milk every day. But mostly, I try to mind my own business - which is something I'd advise you to do.

However, he is the first in the town to help Macreedy by offering him his "limousine" - an old-fashioned hearse parked out back. But the car's ignition doesn't spark and the engine only grinds. Hector appears to explain that "somethin's wrong" - "Could be the wirin'..." Suddenly, Hector reaches into the hood area and rips out the distributor cap and triumphantly exclaims: "Yeah, it was the wirin'." With Macreedy's only possible exit from town now blocked, Doc informs him that there isn't much time: "Well, you got at least till dark. They'd be afraid to see each other's faces."

Macreedy walks to the telegraph agent's office and writes out a message to be telegraphed to Sand City's State Police: "Please wire or phone me re urgent and dangerous situation." But the scared, anxious, upset, lemonade-drinking Hastings, who is ruled over by Reno Smith, is hesitant about sending it:

Macreedy: Are you afraid, Mr. Hastings?
Hastings: Mr. Macreedy, I'm just a good neighbor.
Macreedy: To Smith you are. What about to Komoko?
Hastings: I never seen Komoko in my life, honest.
Macreedy: All right. Then you'll send that message and give me the answer, won't you?
Hastings: Yes sir.