Lord Henry and Basil Hallward discuss Dorian's engagement at the painter's house. They are planning to dine with Dorian before going to see Sibyl's performance that night. Basil can't believe that Dorian is really engaged, saying that Dorian "is far too sensible" to make such a rash decision. To this, Henry replies that "Dorian is far too wise not to do foolish things now and then." Basil is taken aback by Henry's detached, artistic fascination with Dorian's life. The artist disapproves of Dorian's actions, and is worried about the boy's emotional health; Henry, however, is delighted, knowing that whatever the outcome is, it will be greatly entertaining.
Dorian arrives, insisting that he be congratulated. Basil says that was hurt to hear about the engagement from Henry, and not from Dorian himself. Henry quickly changes the subject. Dorian wants Basil to approve of his actions, saying "I have been right, Basil, haven't I, to take my love out of poetry, and to find my wife in Shakespeare's plays?" Basil reluctantly agrees with Dorian. When Henry cynically remarks about the business-like nature of marriage, Basil objects, saying that Dorian "is not like other men. He would never bring misery upon anyone. His nature is too fine for that." Henry continues to philosophize about the nature of women and how they act when in love. To him, "Women treat us just as humanity treats its gods. They worship us and are always bothering us to do something for them." Dorian is sure that Sibyl's acting will put an end to Henry's cynicism and reconcile all disagreements between the three men. When they see her perform, they will be too overwhelmed by her beauty to consider anything else. The three men leave to see the play, Romeo and Juliet.
The theater is surprisingly crowded that night. Once seated in their box, Lord Henry observes the obnoxious, unrefined behavior of the lower-class theatergoers. Basil comforts Dorian against Henry's cynicism. The play begins, and they all note that the orchestra is terrible. Finally, Sibyl appears on stage. She looks beautiful, but acts terribly. Her voice is exquisite, but "from the point of view of tone" is "absolutely false." Dorian is horrified and confused. The other two men are disappointed, but are too polite to make any remarks. Her performance, usually the one saving grace in the theater's otherwise dreadful productions, only gets worse as the play progresses. After the second act, the audience hisses, and Dorian's guests stand to leave. Basil tries to comfort the boy, saying that Sibyl must be ill, and that he shouldn't be upset, since "Love is a more wonderful thing than art" anyway, to which Henry replies that "They are both simply forms of imitation". Dorian is inconsolable. Henry tells him to cheer up, since "the secret of remaining young is never to have an emotion that is unbecoming."
The two men leave, and Dorian forces himself to suffer through the rest of the performance. Afterwards, he rushes backstage to confront Sibyl. She is delighted to see him and surprised at his anger, since she had assumed that he would know the reason for her terrible performance. When he demands to be told why she performed badly, she tells him that having met him, she can no longer believe in the theater. Before Dorian, she says, "acting was the one reality of my life," and now he has "freed my soul from prison" and "taught me what reality really is." Having experienced true love, she says, "it would be profanation for me to play at being in love." Dorian is horrified, disgusted, and completely unable to love her anymore. She can't believe it, and when he pulls away from her touch, she falls to the floor, groveling at his feet. Dorian feels repulsion rather than empathy, and leaves her sobbing on the floor.
Strangely numb and unable to come to terms with Sibyl's lost talent or his unexpected callousness towards her, Dorian aimlessly wanders the city until dawn. He returns home, where he happens to glance at Basil's portrait, and is puzzled to find that the facial expression is slightly different: there seems to be "a touch of cruelty in the mouth." He rubs his eyes and changes the lighting, but is certain that the picture has changed. The cruelty in the expression reminds him of his cruelty to Sibyl, but he feels wronged for the misery that she has caused him with her bad acting, and consoles himself by thinking that "women were better suited to bear sorrow than men...When they took lovers, it was merely to have someone with whom they could have scenes. Lord Henry told him that, and Lord Henry knew what women were." Unable to make any sense of the picture's transformation, he realizes, after much pondering, that "It held the secret of his life, and told his story...changed or unchanged, [it] would be to him the visible emblem of conscience." Exhausted, he covers the portrait with a screen, and goes to sleep.
Dorian's relationship with Sibyl is the first major casualty of the devotion to sensual pleasure inspired by Lord Henry. Valuing artistic beauty above all else allows Dorian to confuse his love for Sibyl's acting with a love for Sibyl herself. She seems to be the perfect wife, because Dorian believes that she can offer him all of Shakespeare's heroines in a single body. Indeed, Dorian remarks to Basil that he has "had the arms of Rosalind around me, and kissed Juliet on the mouth." Dorian's love is a means of escaping reality; therefore, Sibyl's awareness of "what reality really is" is unacceptable.
His resulting cruelty towards her is the first undeniable mark of the corruption of Dorian's character, and therefore causes the first visible change in his portrait. He considers the aesthetic pain caused by her poor acting to be on par with Sibyl's emotional devastation at his rejection. This belief is rooted in the sentiment expressed by Lord Henry before the trio leaves for the play, when he says "I love acting. It is so much more real than life." This statement is a clear indication of Henry's continuing influence on Dorian.
We are also reminded of the statement in the preface that "Those who go beneath the surface [of art] do so at their peril." Dorian is not prepared to see the person beneath the surface of Sibyl's acting. The preface also states that "It is the spectator, and not life, that art really mirrors." Dorian saw himself reflected in Sibyl's acting, because it was artful, but once her acting is revealed as artless, he can no longer see himself in it, and his feelings for her disappear. What he thought was love for Sibyl is really a form of vanity; the pain of enduring her poor performance is actually the pain of not seeing his own reflection.
In Chapter 7, Dorian undergoes several dramatic changes of character: he transforms from a devoted lover, to a bitter art critic, to a cruel betrayer, and seemingly back to a devoted lover. This final change is, however, superficial. He decides to do the honorable thing and marry Sibyl, but only when faced with the possibility of watching the beautiful image in the portrait succumb to degradation. The corruption of Dorian's soul has begun in earnest, as reflected by the first visible change in the portrait.
Interestingly, this chapter marks a turning point in the narrative: the focus switches from Lord Henry to Dorian. Now that Henry's influence has begun to show its effects, the narrative no longer appears as concerned with Lord Henry himself. At this point, the story begins to focus solely on Dorian as a corrupt figure. At the end of the chapter, as Dorian feebly resolves to spend less time with Lord Henry and to marry Sibyl, he is acting more out of vanity than out of love or a true sense of morality; a fact that will be revealed when the portrait fails to change for the better. This is not the last time Dorian will fail to recognize the vanity that lies behind his decisions.