A few months later, Higgins's mother (Mrs. Higgins) is writing letters in her drawing room when she is interrupted by her son. She scolds him for turning up during her "at-home day," the day when she receives guests. Mrs. Higgins claims that her son scares off her guests.
Higgins explains his bet with Pickering over Eliza and says that she is coming to the house to try out her accent. Mrs. and Miss Eynsford Hill are shown in, and they are the same mother and daughter who were waiting for a cab at the beginning of the play. Higgins recognizes them, but he cannot figure out where he has seen them before. Freddy also arrives. Miss Eynsford Hill tries to flirt with Mr. Higgins, but he rails at the company (including himself) for having no knowledge of science, philosophy, or poetry--merely knowing how to act in society.
Eliza is shown in, exquisitely dressed, and she makes quite an impression. In fact, Freddy falls in love with her. Mr. Higgins realizes that they all met on that day at Covent Garden, but nobody else makes the connection. Eliza, who has been warned to limit her conversation to the weather and to people's health, talks about an aunt of hers who supposedly died of influenza but who was perhaps killed so that the killer might steal her new straw hat. Mr. Higgins grows alarmed, and Eliza leaves, but the Eynsford Hills think that by talking about coarse subjects and swearing, Eliza was using a new, fashionable type of slang. Pickering tries to support this assumption by declaring that he can no longer distinguish high society from a ship's forecastle now that people swear so often. Clara declares the "new slang" charming--and to her mother's horror, she herself uses the British curse word "bloody."
Mrs. Higgins invites the smitten Freddy back to spend more time with Eliza. The Eynsford Hills exit. Mrs. Higgins scolds the men, declaring that their project with Eliza, while clever, cannot work because no skill in pronunciation or fancy dresses can change the subject matter of what Eliza talks about. The content will trump the style; she will always give herself away. Like Mrs. Pearce, she also disapproves of the fact that Eliza lives in the house with the two men. Moreover, she complains that Pickering and Higgins are treating her like a "live doll."
The men protest that they take Eliza very seriously and are quite taken with her talents, including the fact that she has a wonderful ear and has taught herself to play the piano. Mrs. Higgins reminds them of the problem they have not yet faced--what to do with Eliza after the experiment is over--and the men reply that they will set her up in some sort of genteel occupation. They exit, talking about how they will take Eliza to a Shakespeare exhibition and then have her mimic all of the people there when they get home. Mrs. Higgins resumes writing letters and exclaims, "men!!" with exasperation.
In this act we witness the transformation of Liza the flower-girl into Eliza the society lady. The change caused by repackaging her in new clothing and providing her with a new accent is so complete that she goes unrecognized by people who have seen her in her former state. Even the rough content of her conversation does not reveal her class, despite the concerns of the people who know to look out for such content.
The fact that Freddy becomes instantly smitten with her emphasizes the concept of infatuation on the basis of external characteristics. He barely noticed her when she was a flower-girl, but the change in her looks and her talk has made her infinitely more attractive to him. These characteristics make her seem to be of a class much higher than before. The location makes a difference, too; what would a girl like Liza be doing in such a respectable home? Furthermore, the fact that the other characters play her as a cultured woman makes it harder for the visitors to become suspicious.
Act III also brings a sobering touch of realism back to the play. Standing alone, the bet between Pickering and Higgins seems amusing, worthwhile on humanitarian grounds, and intellectually and practically challenging. Taken in the context of society more generally, a stance which Mrs. Higgins emphasizes, the process is potentially dangerous. The primary function of genteel ladies at this time was to secure a safe and lucrative marriage for themselves, a fact of which we are reminded as Clara eyes Higgins. She views him as marriageable not because she loves him, but because she has calculated thatshe would be a "good catch" monetarily and in terms of his position in society. Eliza has already been made dangerous, however, because she exists outside of this market. Because of her background and lack of pedigree, she is unmarriageable, no matter how charming she may seem. Changing her accent and manner of dress ultimately will cause confusion because it will come out that she is taking part in a slice of society of which she cannot become fully a part-Freddy will only be disappointed. Mrs. Higgins puts it bluntly when she complains that Higgins has given Eliza the "manners and habits which disqualify a fine lady from earning her living without giving her a fine lady's income." The change of setting from the isolated Wimpole Street laboratory into a "society house" makes this shift even starker. Eliza is becoming too good for her old society, and she is not yet good enough for her new society. This gap in the experiment is troublesome, and something must be done about it. It is not clear, however, that the men are fully aware of the problem or that they have a viable solution.