David stays with Steerforth for another week and meets Littimer, Steerforth's servant, who carries himself with such an air of respectability and haughtiness that it takes David by surprise. Once David's visit comes to an end, he convinces Steerforth to go with him to Yarmouth to visit Peggotty. Thus, they leave Littimer behind and separate, agreeing to meet at Peggotty's house. Along the way, David stops by Mr. Omer’s shop to thank him for being so kind to him many years ago after his mother died. He finds that Mr. Omer and his family are very happy, and he also learns that Little Emily is working in the shop now. Unfortunately, her desire to be a lady turned many of the girls against her, although Mr. Omer's daughters like her very much.
David then goes to see Mr. Barkis and Peggotty, who does not recognize David right away but begins to cry and laugh over him as soon as she does. Mr. Barkis, afflicted with rheumatism, is very happy to see the boy as well, and he even goes to the trouble of producing some of his precious money so that Peggotty can make him a nice dinner. Steerforth joins them, and together they go over to Mr. Peggotty's house, just in time to learn that Ham and Little Em'ly are getting married. Everyone, even Mrs. Grummidge, is overjoyed. For the whole night at the house everyone, especially Steerforth, feels very exuberant. But as he and David are walking away from the house, Steerforth suddenly becomes sullen and remarks that Ham is not good enough for Emily. Yet, the mood soon passes.
During his stay, David visits all of the familiar places of his youth, including Blunderstone Rookery. Seeing these places inspires mixed feelings of sadness and happiness. He and Steerforth often go their separate ways during the day, so he does not know what Steerforth is doing much of the time. One day, he encounters Steerforth sitting in front of Mr. Peggotty's fire, upset. He wishes that he could have had a father and says he would have even preferred to be Ham than to have grown up without a father figure. He also reveals that he bought a ship which Mr. Peggotty will sail in his absence, and he named it "The Little Em'ly."
David and Steerforth then meet Miss Mowcher, a small but very loud lady who cuts Steerforth's hair. They talk about Mr. Peggotty, Ham, and Little Emily, and Steerforth reveals that he thinks Little Emily can do much better and find herself a gentleman. He and David separate once more, and David heads to Peggotty's house for the evening. There, he finds Ham and Little Emily with Martha, a girl with whom Emily worked while she was at Mr. Omer's. Martha has encountered very difficult times and is asking for Emily's help. After she leaves, Emily becomes very distraught, saying that she isn't as good as she ought to be and that she doesn't deserve Ham. David, Peggotty, and Ham comfort her, and soon she is back to normal and acting very affectionately towards her fiancé.
The next morning, David decides not to tell Steerforth the events of the previous evening, for he wants to keep Little Emily's confidence. However, as they are leaving Yarmouth, he does tell him about a letter that he received from his aunt saying that he should pursue the career of a proctor, and Steerforth agrees that it would suit him. He meets up with Miss Betsey, who insists that she will help him become a proctor despite his protests that it is too expensive. They leave for Doctors' Commons, where proctors have offices, but along the way they run into a man who David believes is a beggar. His aunt is very frightened by the man, and she orders David to stay while she goes away with the man. When she returns, David finds that she has given most of her money to him, but she asks that they never speak of the incident again. They find David a job at the offices of Spenlow and Jorkins and a nice house with a landlady named Mrs. Crupp.
Although David loves his new apartments, they get very lonely for him, and soon he goes back to see Steerforth. Steerforth convinces David to host a dinner party for him and his two friends at his new apartment later that night. The four have a good time and get drunk. They go to the theater, where David runs into Agnes, who is horrified by David's very inebriated state. She makes him go home, and he wakes up the next day hung over and absolutely mortified.
David then receives a letter from Agnes asking him to visit her, which he gladly does. He apologizes for his behavior and calls Agnes his "good angel." She forgives him but warns him about socializing with Steerforth, whom she calls David's "bad angel." David does not agree to stop visiting him, but her words darken his impression of his companion. Agnes also tells him that Uriah Heep has forced her father into a partnership with him, which makes her very upset.
Later that evening, David sees Tommy Traddles, his old friend from Salem House, and Uriah. Uriah attaches himself to David and invites himself to his house. Along the way he mentions his intention to marry Agnes, which disgusts David. Uriah ends up staying the night, which makes David very uncomfortable.
These chapters are very important for the development of Steerforth's character. Until now, we have mainly seen his cool, collected demeanor as well as his haughtiness, with only Rosa Dartle's scar hinting at a darker side. Now, however, we see that Steerforth is much more troubled than he normally lets on. He obviously has missed the father whom he never had, even envying Ham, a man of a much lower class than himself, for having Mr. Peggotty in his life. The degree of his despair and envy indicates that he is much more affected by this lack than he has shared before.
Steerforth also shows his soft side when he becomes enamored with Emily and feels upset that she is engaged to Ham. Still, he denies it as first. His feelings for her seem to continue to grow in intensity as time goes on, for his moodiness becomes more and more pronounced. Steerforth's moodiness may also be related to the difficulties of feeling attracted to a girl of such a low class. In any case, we will see later that class distinctions do not stop him from going after what he wants.
The reintroduction of Emily reveals how much she has changed since we last left her. She has fallen victim to the desire of climbing the social hierarchy, and this yearning of hers to become a "lady" has turned the other girls of the town against her. This could indicate that, having been intoxicated by her desire for social status, Emily has developed some of the haughtiness that characterizes Steerforth. Perhaps she is failing to realize just how lucky she is to marry a man as loving as Ham. It is becoming clear that her engagement is on rocky ground.
It is also here that Agnes becomes characterized as David's "good angel," with Steerforth somewhat predictably his "bad angel." David feels quite embarrassed after running into her while drunk, which has brought questions of morality and continence to the fore. The extent of his humiliation in being found drunk reveals to us just how much esteem sweet Agnes holds in David's mind and how much David aspires to be seen as good. She has enough sway over him to shake his faith in Steerforth, who is sometimes the agent of his troubles.
Uriah's character continues to make David more and more uncomfortable, and Uriah begins implementing his malicious plans by forcing Mr. Wickfield into partnership with him. His revelation that he intends to marry Agnes simply adds to his repulsiveness. We will see Uriah will become a larger and larger presence within the novel.
Finally, note how frequently people visit one another’s homes. A good idea for analyzing the interpersonal dynamics in this section is to consider what kinds of events seem comfortable or uncomfortable, appropriate or not, given different groups of people in different homes. The presence of certain people tends to shape the tenor of the conversation.