The final chapter of the book picks up where the first chapter began: with Kesey's arrest, hearings, and bail, awarded only because he promises that he is going to tell the country's youth to move beyond acid. However, Kesey's lawyer's promises don't ring quite so true in real life, when Kesey begins his attempts to fulfill these deals.
Kesey finds himself caught between two camps, neither of which trusts him: the authorities on one side, and the Haight-Ashbury scene that has taken over the acid movement in Kesey's absence. Kesey begins to plan a great Acid Test Graduation in a large auditorium for Halloween night, but other leaders of the movement feel he is engaging in a power play, and eventually back out of the deal. Kesey finds himself with nowhere to hold the Graduation, and no Grateful Dead to play it. Instead, he begins to plan for something else.
He tells the Pranksters that they are going to hold the Graduation right in The Warehouse, the new "Rat shack." He tells them to invite all of the acidheads and Pranksters that have ever come along for the ride on the bus. They begin compiling a great list of all the characters from previous chapters, and try to decide how they are going to get them all there. The Pranksters go to work fixing up The Warehouse and preparing for the Graduation the next night.
There is a great buzz around town about the Graduation. Reporters and journalists from all over the country show up with tape recorders and cameras to document the ordeal. Even though The Warehouse is a complete dump, the Pranksters have rigged it with all the electronic equipment they could find, along with a stage and a new band to play the music for the event. Soon people begin pouring in, including the Hell's Angels and other acidheads from San Francisco, all curious to find out what this great party is going to be like. The music and lights begin, and some people take acid, but the Pranksters stay away from it.
Neil Cassady begins the ceremony, and all the lights go off. They build a crude altar by throwing junk into the middle of a big spotlight, the only light in the room, and Kesey gets on the microphone and tells them about the experience they had of moving beyond acid when they were in Mexico. The crowd doesn't seem to be really getting what Kesey is saying. Soon, some cops filter into the room, giving the whole party bad vibrations, but Kesey and Cassady are still trying to build up the ceremony without acid. They have the lights and the music...but people just aren't getting into it.
Soon people start clearing out of The Warehouse. Things aren't going as planned, and Kesey gathers all of the Pranksters around him in one last attempt to find a unified mind without having to take acid. They get very close, or so says Kesey, and the band breaks into an acid rock version of "Pomp and Circumstance." Cassady jumps onto the stage wearing nothing but khakis and a mortarboard hat, and begins handing out diplomas to all of the Pranksters. Most of the people who are left simply don't understand what is going on.
For the next few days rumors of what happened at the Graduation float around, and everyone seems to agree that the party was a disaster. The Pranksters move out of The Warehouse but leave most of their junk piled in an abandoned lot. The neighborhood petitions the mayor's office to have it cleaned up, and as the bulldozers come in to demolish the Day-Glo equipment and junk, the neighborhood passes from one time to another. Many of the Pranksters scatter to other places, though Cassady sticks around San Francisco. He shows up at an Acid Test one night, but it's a very different kind of Test than the ones the Pranksters used to throw. The faction of acidheads who want to link acid trips to Eastern religion have taken over, and the Test Cassady attends incorporates Indian music and ceremony. Cassady tries to get a more raucous party started, but no one seems to pay him any attention.
At a local club, The Barn, the remaining Pranksters come to play a set of music. The opening act is a group called The New Dimensions, and they are a throwback to the post-World War II era jazz of the Beat Generation. They are a good band, but the Pranksters wire up all their sound gear and start making strange noises. The New Dimensions get angry and leave, and the Pranksters take the stage with their strange music. They aren't really playing any songs, just taking acid and making noise, and soon the entire place clears out, even some of the Pranksters, until it is just Kesey and Babbs trading lines of unintelligible poetry and the line "WE BLEW IT!"
Three weeks later Kesey began the first of two trials for possession of marijuana. Both trials end in hung juries, and eventually Kesey pleads no contest to a lesser charge. He has to serve a few months in jail, after which he will work on the farm near La Honda. He takes his family back to Oregon, and they settle down there before he begins his sentence. The other Pranksters finally scatter, and Neal Cassady leaves for Mexico. A few months later, Cassady is found dead outside a small town. The cause of his death is unknown, though several witnesses say that he drank alcohol on top of barbiturates. Others say that he committed suicide. After completing his jail time, Kesey returns to Oregon, where he begins to write again and starts taking visits from several of the Pranksters. The bus, however, stays parked beside his new house.
The Acid Test Graduation is a smashing failure. Kesey cannot get the acidheads on his side because they fear he sold out to the cops, and Kesey becomes a scapegoat for the legal problems some of them are beginning to face. What the Graduation really shows is that the LSD movement has grown bigger than Kesey and the Pranksters, and they no longer have control over it as they did before.
In a way, the Acid Tests were a massive success. Their goal had been to take the LSD experience to a bigger audience, and that is exactly what they achieved. By the time that Kesey begins the Graduation the national news media is there, ready to report. This is no longer an underground phenomenon: the whole world now knows about the Acid Tests and is eager to see what Kesey will do next. They are also curious to find out whether he will hold up his end of the bargain to move beyond acid, as he has promised the authorities.
The Graduation is a failure because for the first time in the book, Kesey makes a miscalculation. Kesey and Owsley have a heated argument over the nature of the acid movement in the first part of the chapter, during which Kesey says that the experience is not based around drugs and Owsley insists that it is. As it turns out, when Kesey tries to control the movement through the sheer force of his charisma, he fails. The movement is based around the drugs, and when the drugs aren't there, the movement cannot be sustained. Kesey is not able to turn his experience on LSD into a true religious experience because it cannot move beyond its attachment to LSD. The drug is essential.
As the book closes, the Pranksters begin to look like a sad group. Time, and the movement, has simply passed them by. Their demise signals the beginning of the end for LSD and the hippie movement in general, but the Pranksters are the first casualties. Cassady realizes that the Acid Tests have taken on a life of their own, and that he can no longer control their content or message. Kesey and Babbs' performance at The Barn is emblematic of their failure. Their music, though it once had power and made perfect sense to them, simply doesn't appeal to people anymore. In the end, the lights are turned out on them and they can do nothing but lament the fact that they had the opportunity to own the world and "blew it."
Perhaps the most tragic figure of the book is Cassady. He was the hero both of Kerouac's earlier novel and Kesey's great psychedelic adventure, but even though Kesey had hoped to create a kind of Nietzschean superman exemplified by Cassady, the reader sees that Kesey's vision of this future is a flawed one, and Cassady becomes more of a victim of his own fast-paced lifestyle than a hero in any meaningful sense. As the book closes, one is left to ponder whether the entire Prankster experiment was one big joke, after all.