The narrator relates that he had been living in the brownstone for about a week when he noticed an unusual card on one of the mailboxes: "Miss Holiday Golightly; Traveling." On a subsequent night at a late hour, he wakes to hear Yunioshi arguing with a young woman who has rung his doorbell to enter the building, having lost her own key. She finally placates Yunioshi by promising that she'll let him "take those pictures we mentioned." The narrator peeks into the stairwell and finally sees Holly: a thin, well-groomed 18-year old woman with short, multicolored hair and clean, healthy appearance. Behind her, nuzzling her neck, is a short, plump older man whom Holly thanks for seeing her home and then shuts out of her apartment. He argues with her through the door, upset that she has called him "Harry" when his name is Sid Arbuck, and complains that he picked up the check for her and her five friends. Holly "advises" Sid that the next time a girl asks him for "powder-room change", he should give her more than twenty cents, and he finally leaves.
Holly stops ringing Yunioshi's bell and starts ringing the narrator's at late hours whenever she has lost her key, which is often. Apart from these exchanges, the narrator and Holly don't speak. However, the narrator sees her on the town, once at a restaurant table surrounded by older men, and a second time dancing outside a saloon with a group of army officers. On his way home from spotting Holly at the restaurant, the narrator admires an elaborate and expensive birdcage in the window of an antique store.
In the absence of direct contact, the narrator spends the summer inspecting Holly's trash, finding that she reads astrological charts, smokes "an esoteric cigarette called Picayunes", dyes her hair, and receives love letters "by the bale". Watching her through his apartment window, he discovers that she has an orange tabby cat and plays the guitar, including several obscure country songs that suggest she was not from a city, but "pineywoods or prairie".
One night in September, the narrator is relaxing with a bourbon and a novel when he has the unpleasant feeling of being watched. He finds Holly standing on his fire escape watching him through the window. She is wearing only a flannel robe. He lets her into his apartment, and she explains that she has "the most terrifying man downstairs", who, in his drunkenness, has bitten her shoulder. Sitting down on a chair, Holly tells the narrator that he looks like her brother Fred, a "sweet and vague and terribly slow" boy who is now in the army, and the narrator agrees to let her call him by that name. The narrator reveals that he's a writer, and she reveals that she "trained" herself to like older men. When the narrator admits that he has yet to publish his writing, Holly tells him that she has connections that could help him.
The narrator fixes Holly a drink, offers her an apple, and he reads her his latest short story. She appears bored throughout the reading, and, upon its conclusion, admits that "stories about dykes bore the bejesus out of me". The narrator is too discouraged to explain to Holly that the story was not about lesbians. Holly confesses that she is looking for a lesbian roommate, as they "love to do all the work", and that she is "a bit of a dyke" herself; "everyone is: a bit."
Upon discovering that it is 4:30, Holly becomes anxious. She tells the narrator that on Thursdays, she has to catch the 8:45 train to make her weekly visit to Sing Sing prison on time. Holly confesses that she is visiting Sally Tomato, a notorious gangster who used to frequent Joe Bell's bar before he was imprisoned. Sally was never Holly's lover, but he admired her from a distance and arranged for her visits to Sing Sing through his lawyer, Mr. O'Shaughnessy, who offered her $100 a week for the service. Holly is pleased with the arrangement, despite the fact that she has to pretend to be Sally's niece and convey coded messages ("weather reports") between the gangster and his lawyer.
The narrator expresses concern about the arrangement, but Holly tells him not to worry; she's taken care of herself "a long time." She joins the narrator in bed and tells him to go to sleep, but he stays awake, aware of her presence beside him. Holly starts crying. When the narrator asks her why, she bolts out of his window, saying "I hate snoops."
The second section of Breakfast At Tiffany's exits the frame narrative of the introduction and moves into the central story of the narrator's relationship with Holly. Capote develops several of Holly's unique characteristics, namely, her ambiguous identity, her unconventional sexual politics, and her artifice. To a lesser extent, the narrator is also elaborated as a character. Fascinated by Holly, he gathers details about her through anonymous surveillance: he secretly watches Holly out on the town and on her fire escape, and he investigates her trash. While Holly's is the narrator's story to tell, he is outside it, an observer or voyeur looking in on Holly's life. The narrator is thus established as a passive person, a writer who learns by observing others, rather than experiencing life directly. Moreover, he remains nameless (except to Holly, who calls him by her brother's name, Fred). Nameless, without qualities except those of the observer, the narrator of Breakfast at Tiffany's is the epitome of the objective, "all-seeing eye" of third-person realist fiction. The narrator's struggle to maintain his writer's "objectivity" in the face of his increasing personal investment in others is crucial to the novella, and to Capote's work in general.
Who is Holly Golightly? This question, which recurs throughout the novella, structures the second section. The narrator is intrigued by the card on Holly's mailbox, which reads: "Holiday Golightly: Traveling." The unusual name suggests Holly's unconventional nature. A "holiday" is a time of rest from the regular work-day, thus suggesting Holly's rejection of the Protestant work ethic that was prized highly in early 20th century capitalist America; "Golightly" is a compound of "go" and "lightly", which encapsulates her tendency to change locations, lifestyles and identities without hesitation or guilt. The word "traveling", which replaces the occupation title on the standard mid-century calling card, underscores Holly's flightiness, her temporary presence in any single location or relationship. Moreover, it alludes to the country song the narrator observes Holly singing on her balcony, which contains the line: "Don't wanna sleep, Don't wanna die, Just wanna go a-travelin' through the pastures of the sky". In the song, travel is presented as an alternative to death; Holly's calling card suggests that she "travels" as a way of escaping the deathlike banality of conventional existence.
However, the narrator's observations of Holly reveal that many of her distinctive characteristics are the product of conscious self-fashioning. In her trash, the narrator finds hair dye, indicating that her unique multicolored hair is "self-induced." The remains of "melba toast and cottage cheese" suggest that her fashionably thin figure is the product of dieting. And viewing Holly on her balcony, the narrator observes that, in addition to popular show tunes, Holly plays obscure country songs on her guitar. He notes that these are the songs that "seemed to gratify her the most", suggesting an unexpected rural background for the seemingly urban socialite. These observations imply that Holly guards her identity because, in part, it is a construction, an artificial creation that masks her more pathetic true story.
The narrator's conversation with Holly confirms his observations that she earns her living through unconventional means. She lives off the money her male admirers give her, not exclusively for sexual activity, but for her charming company in the bars and restaurants of New York. This, along with her short hair, candid discussion of sex and admission that she is "a bit of a dyke", indicates Holly's progressive sexual politics and positions her outside the strict definition of femininity that mid-century American women were expected to fulfill.
Holly's conversation with the narrator introduces another of the novella's key themes: the commodification of art and experience. Holly asks the narrator if he is a "real writer", to which he answers: "it depends on what you mean by real." Her response, that a real writer is one whose writing makes him money, along with her mention of Benny Shacklett, a writer of radio programs, indicates the difference between Holly and the narrator's definitions of art. Holly, a fictional person of her own making, is a woman who sells her time, affections, and even her body for money. She views herself as a commodity, as something that can and should be bought and sold. She is art as a commodity, and she extends this reasoning to the narrator's writing. The narrator resents her implication that the value of art is limited only to its success on the commercial market.
Moreover, Holly's visit to the narrator's apartment demonstrates the quick bond between the two characters, and foreshadows the friendship to come. Her affectionate description of her brother Fred, followed by her decision to call the narrator by this name, indicates that the narrator, like Fred, is someone with whom she feels comfortable and safe. The narrator's association with Fred becomes key to his dynamic with Holly throughout the novella.