Finally the caravan reaches the oasis, where the alchemist awaits its arrival. (He has known from reading the various omens of the desert that there is someone in the caravan who is seeking him out.) It makes the old alchemist happy to see the travelers arrive, to see them so elated at the sight of palm trees after so much sand.
The war amongst the tribes makes the desert too dangerous to pass, so the caravan must stay at the oasis indefinitely. This gives the Englishman time to seek out the alchemist. With Santiago helping him, the Englishman begins to question people about the alchemist's whereabouts. In the process of asking, Santiago meets a beautiful girl at the well and falls immediately in love. He realizes that when you are in love you hear the language of the Soul of the World perfectly. Her name is Fatima and he begins to meet her at the well every day and tell her his story and of all the things that he has learned. Finally, he tells Fatima he wants to marry her. He even thinks about giving up his quest to the Pyramids to be with her. Fatima, however, tells Santiago that she understands his need to go find the treasure, and that she in fact wants him to realize his goal. The women of the desert, she explains, are proud of their men's freedom. This confuses Santiago, who is unable to separate love and possession. While thinking about this alone on the outskirts of the oasis, Santiago has a vision of an invading army. After consulting one of the guides of the caravan, Santiago resolves to tell the chiefs of the oasis what the omens of the desert have shown him.
Santiago tells the chiefs and, after some deliberation, they decide to ready themselves for war - even though this is against the tradition of the oasis, which is usually considered neutral ground. The chiefs make a stipulation: if the enemy arrives, the chief will give Santiago a piece of gold for every 10 enemies slain; if Santiago's vision is wrong, he will be killed. Walking home from his meeting with the chiefs Santiago is pensive but sure that he has made the right decision. Suddenly, he is assailed by a man with a falcon on his shoulder, dressed all in black, riding a white horse. The man holds a sword to Santiago's head and demands to know how he knew of the coming of the army. Santiago, frightened, explains to the man about the omens of the desert and his Personal Legend, concluding that he had no choice. The man understands completely, to Santiago's surprise, and takes his leave, telling Santiago to come see him if he survives the coming days. As the horseman rides away, Santiago realizes that he has just met the alchemist.
The next day, 500 armed tribesmen enter the oasis as Santiago has predicted. The men of the oasis, duly warned, kill all of the intruders and the chieftain of the oasis awards Santiago 50 pieces of gold and asks him to become the oasis's counselor.
That night, Santiago seeks out the alchemist and finds his tent. The alchemist tells Santiago to prove that he can read the language of omens by finding life in the desert. Santiago trusts his horse to guide him to life, and they find a snake which the alchemist neutralizes with a spell. Satisfied, the alchemist offers to lead Santiago across the desert to the treasure. Santiago is conflicted because he wants to stay at the oasis with Fatima. The alchemist responds that "love never keeps a man from pursuing his personal legend. If he abandons that pursuit, it's because it wasn't true love...the love speaks the Language of the World." (120) Santiago decides to leave the next day with the alchemist.
Over the course of this section, the alchemist implicitly chooses Santiago as his disciple over the Englishman. This is counterintuitive, considering that the Englishman is much more educated in the secrets of alchemy than Santiago. The alchemist, though, shows that the intuitive method of Santiago is preferable to the intellectual pursuit of the Englishman. Santiago has been trying to learn about the universe by diving into it, experiencing it, seeing, hearing, and tasting it - not just reading about it.
This section also showcases a substantial increase in Santiago's powers. He is now able to use his skills of divination to protect those that he cares about. He is tempted, however, to use these powers, acquired in order to pursue his Personal Legend, for short-term gain. In this way, the attraction of the position as a counselor of the oasis is an ethical dilemma. Santiago would be truly squandering his abilities if he were to use them for something as short-sighted as such a position. It can also be asked whether he would even retain said powers if he stayed at the oasis, since he would have given up on the sincere commitment which allowed him to achieve such powers in the first place.
Love comes to the fore in this part of the narrative, but it is complicated by the book's philosophy. Fatima, Santiago's love interest, tells him that she would rather him achieve his Personal Legend than stay by her side. Her reasoning is that she loves Santiago and therefore must love his dreams as well. The alchemist, who encourages Santiago to pursue his Personal Legend, has a slightly different logic. He claims that, although Santiago will be extremely happy for a while, he will come to resent Fatima for preventing him from achieving his dreams. It is better to pursue those dreams than to allow them to fester. The other side of this logic is that the alchemist claims that there can be no conflict between true love and one's Personal Legend. This is because true love is defined as that love which does get in the way of the Personal Legend. In this way, the novel sets up the Personal Legend as the central organizing principle of a spiritually fulfilled life. Once the Personal Legend is identified and committed to, all other things will become clear.