The narrative shifts to the discovery of the main characters after they plummet from the Bostan.
The elderly and senile Rosa Diamond lives on the English coast. She sees Gibreel crawl out of the ocean, but in her senility believes she is seeing William the Conqueror. Saladin is also there, huddled in despair, but Rosa does not initially see him.
The men have undergone some physical changes during their fall. Gibreel’s previously awful breath has freshened, and he now literally glows. Saladin, on the other hand, now has both terrible breath and some tiny horns on his head. His personality also seems to have changed: he cannot remember significant portions of his past, and a sense of impending doom makes him hesitate to call his wife, Pamela.
Rosa invites the men to stay at her house. Saladin stays alone in his room, torn over whether to report his survival to his wife. When he finally calls the house, a man's voice answers, and Saladin quickly pretends he dialed the wrong number and hangs up. The mystery consumes him.
Some neighbors had spotted Gibreel and Saladin crawling from the water, and they reported the men to the police, assuming they were illegal immigrants. Fifty-seven officers arrive to arrest them, and they laugh at Saladin’s insistence that he is a British citizen. This is the moment that Saladin realizes he has grown horns. The officers do not arrest Gibreel, perhaps because he is dressed in a smoking jacket that belonged to Rosa's husband and carries himself as master of the house. However, the police are also attracted by the halo that now glows behind his head. As they drag Saladin from the house, he begs Gibreel for the help, but the latter man simply ignores him, as though in a trance.
Gibreel finds himself “in some sort of trance" (148). He does not understand why he has not called Alleluia, or why he allowed Saladin to be arrested. For the next few days, he recovers from his ordeal and listens to Rosa’s rambling stories about her life with her husband in Argentina. She tells him about Martín de la Cruz, a violent ostrich-hunter whom she loved, and his wife Aurora del Sol, who became Rosa’s enemy. Martín murdered Aurora’s lover, but Rosa and her husband, Don Enrique Diamond, helped cover up the crime.
Gibreel takes Rosa dancing for her eighty-ninth birthday, but the exertion proves too much for her, and she dies the following night. On her deathbed, she recounts a romantic encounter between herself and Martín, but it is unclear whether they actually had sex. Later, she and her husband murdered Martín; the government agreed not to press charges if Rosa and Enrique returned to England. In a surreal sequence, Gibreel lies down with Rosa in a boathouse; the incident echoes Rosa’s encounter with Martín.
After arresting Saladin, Officers Stein, Novak, and Bruno humiliate him by pulling down his pants. Saladin is shocked to find that he is starting to turn into a goat - he has grown fur and cloven hooves, and his voice sounds like incoherent bleating. Oddly, the police officers are unfazed by the transformation, and simply make jokes about Saladin’s enlarged penis. In his panic, Saladin excretes goat pellets, and the officers force him to eat them. They then have a discussion about voyeurism and surveillance while their inferiors beat Saladin up. Eventually, Saladin convinces them to check the computer for evidence that he is a citizen. When they realize he is indeed a British citizen, they worry about the repercussions, and then manufacture reasons to detain him so they can defend themselves. They also beat him further.
Saladin wakes up in a hospital, where he is being treated for pneumonia. This treatment involves a physical therapist - Hyacinth Phillips - literally beating the fluid from his lungs by punching him in the chest. Officer Stein visits and warns Saladin not to file a complaint about his treatment, since his only witnesses are gone – Rosa has died and Gibreel has vanished. That night, a manticore (a man with a tiger’s head) visits Saladin and explains that many others in this ward have been turned into animals. He explains that the English are responsible. “They describe us,” he says. “That’s all. They have the power of description, and we succumb to the pictures they construct” (174).
Hyacinth (who, we learn, is black) recruits Saladin to join an organization of transformed humans. They all escape from the hospital, and Hyacinth and Saladin head off together to London.
The narrator tells us who answered the phone when Saladin called Pamela before leaving Rosa's. It was Saladin's old friend and Pamela's new lover, Jumpy Joshi. Jumpy went to college with Saladin, and had long been jealous of his Saladin's success with women. During his absence, Jumpy started visiting Pamela, who was drinking a lot, and they fell into a sexual relationship. Jumpy recognized Saladin's voice on the night he called, which is troubling because they all assumed him dead in the explosion.
After reflecting on Saladin's artificiality, Jumpy guiltily confesses to Pamela that Saladin has survived. Although she initially believes him, a receptionist at the airline informs her that his survival is impossible. Pamela, furious, spends a few days pampering herself at a luxury hotel. Pamela and Jumpy both privately recall their complex relationship with Saladin. Jumpy recalls dragging the reluctant Saladin to an anti-war demonstration, where he humiliated the actor by jumping on the Prime Minister’s car. Pamela, meanwhile, recalls how she was attracted to Saladin because he was Indian, while Saladin was attracted to her because she was English.
After a few days in the hotel, Jumpy and Pamela realize that they still love each other, so they meet to make love for seven days straight. At the end of the week, Saladin breaks into his house and finds them in each other’s arms.
Gibreel boards a train to London, daydreaming about seeing Alleluia again. He mutters her name aloud, and John Maslama, a wealthy Indian immigrant sitting in Gibreel's compartment, believes that the actor is praying. Maslama starts a conversation about religion, and it quickly becomes clear that he is a fundamentalist lunatic. He recognizes Gibreel from his film career, but soon begins to wonder whether this Gibreel is an imposter. To diffuse the tension, Gibreel pretends to be an angel, come to earth to decide whether humanity is worth saving. Maslama praises the Lord, and Gibreel flees to another compartment.
Near London, Alleluia gives a lecture at a girls' school about her experiences climbing Everest. She describes seeing ghosts on the mountain, including an apparition of Maurice Wilson, a yogi who tried to scale the peak alone in 1934, but died in the attempt. The narrator tells about her life. Despite her marked success in mountain-climbing, she had recently been diagnosed with flat arches, which cause her pain while walking and make the prospect of greater ascents unlikely.
On his way to see Allie, Gibreel has visions of Rekha Merchant. These disturb him so much that he collapses near Alleluia's house. She finds him there, in what seems a miraculous reunion.
In this return to the London plot, Rushdie examines the consequences of living in a foreign culture. One of the novel's central themes is the nature of being an immigrant, an expression of the 'other' in a foreign culture. The most dramatic of these consequences is Saladin’s transformation into a demonic goat, which, the manticore explains, is a reflection of how the English see him and other minorities. Immigrants are forced to see themselves as animals, and ultimately accept the description as true. Ironically, Saladin wants nothing more than to be an actual British person, and yet he now realizes that his Indian heritage has always defined him in their eyes.
This theme resonates throughout this section, in both fantastic and ordinary ways. Some names - like Saladin's or Jumpy Joshi's - have been anglicized. Pamela admits to herself that her marriage is based on racial identification, both on her part and Saladin's. The police brutality towards Saladin echoes the experience of many immigrants when they are deported. The fact that the police are unfazed by Saladin's transformation suggests they have always viewed foreigners as animals in any case. Lastly, the manticore is notably black, not Indian, which suggests that Rushdie's interest in immigration and otherness transcends his own heritage. In later sections, he explores the various degrees of racism that exist even amongst minorities in a foreign country.
Another important theme in this section is the relationship between stories and real life. In a telling moment from Chapter 2, Rosa recalls how the Argentine villagers interpreted her brush with typhus as “an allegory of the old estate’s decline” (155). There is a layer of self-reflexivity here; the villagers are interpreting reality as if it were a story, but of course, their interpretation is itself part of a story that Rosa is telling to Gibreel. This moment suggests that real life and stories are inextricably bound to each other; the methods we use to interpret literature can also help us understand the world around us. Gibreel's identity is likewise always complicated by the roles he has played in religious films. Perhaps he is angelic because of these roles, or perhaps these roles made him angelic, or perhaps the truth lies in our general inability to delineate truth from fiction. The answer is never provided, but rather forces us to consider the ways in which we mistake stories for reality.
On a related note, this section includes a multitude of allusions. Several are references to several Western fairy tales, including Red Riding Hood and Snow White. “Here I am, in Grandmother’s house. Her big eyes, hands, teeth," Saladin thinks to himself as he recovers from the explosion (140). Later, Gibreel describes Rosa as “white as snow and as red as blood and as black as ebony” (156). This is another example of characters using stories to make sense of reality, but it also ties into the novel’s examination of the immigrant experience. Saladin and Gibreel refer to the mythologies of Indian, English, and Islamic cultures. This gives them unique perspectives and insights on the world that other, non-immigrant characters, cannot have. This perspective is of course echoed in that of the narrator, who mixes a myriad of allusions. In this section, in addition to the synthesis of Islamic mythology with British mythology (that of William the Conquerer), Rushdie alludes to the work of Jorge Luis Borges, both in the stories about Argentina and in the description of the manticore.
The religious symbolism is unceasing in the book. Sometimes, it is represented through the use of holy numbers. For instance, Jumpy and Pamela make love for seven days. There are also several sets of characters in the work who function as trinities. In Part III, the immigration officers are presented as a trinity. The secondary characters in this novel often appear in groups of three; the previous section featured the three goddesses, as well as Mahound’s three important disciples: Bilal, Salman, and Khalid. Rushdie explicitly acknowledges the religious significance of these triads: “The officer, Stein ...” he writes, “appeared to be the leader of the trinity, or at least the primus inter pares” (165). It is important not to assume that Rushdie is attempting allegory; that is, the characters do not necessarily represent particular religious figures. Instead, the intent seems to be to imbue the entire story with a synthesis of both mythic significance and grounded reality, to suggest that both are intertwined, both in the world and within us.
Occasionally, the narrator offers clues that can help readers analyze the novel’s style. For example, Rushdie writes about Rosa Diamond: “Repetition had become a comfort in her antiquity; the well-worn phrases, unfinished business, grandstand view, made her feel solid, unchanging, sempiternal, instead of the creature of cracks and absences she knew herself to be” (134). Rushdie himself includes many ‘well-worn phrases’ and expressions in his characters’ thoughts and dialogue. The comfort Rosa takes in verbal repetition evokes the way that Rushdie’s writing style unites the novel’s two tenuously connected plotlines.