Sources for Don Quixote include the Castilian novel Amadis de Gaula, which had enjoyed great popularity throughout the 16th century. Another prominent source, which Cervantes evidently admires more, is Tirant lo Blanch, which the priest describes in Chapter VI of Quixote as "the best book in the world." (However, the sense in which it was "best" is much debated among scholars. Since the 19th century, the passage has been called "the most difficult passage of Don Quixote".) The scene of the book burning gives us an excellent list of Cervantes' likes and dislikes about literature.
Cervantes makes a number of references to the Italian poem Orlando furioso. In chapter 10 of the first part of the novel, Don Quixote says he must take the magical helmet of Mambrino, an episode from Canto I of Orlando, and itself a reference to Matteo Maria Boiardo's Orlando innamorato. The interpolated story in chapter 33 of Part four of the First Part is a retelling of a tale from Canto 43 of Orlando, regarding a man who tests the fidelity of his wife.
Another important source appears to have been Apuleius's The Golden Ass, one of the earliest known novels, a picaresque from late classical antiquity. The wineskins episode near the end of the interpolated tale "The Curious Impertinent" in chapter 35 of the first part of Don Quixote is a clear reference to Apuleius, and recent scholarship suggests that the moral philosophy and the basic trajectory of Apuleius's novel are fundamental to Cervantes' program. Similarly, many of both Sancho's adventures in Part II and proverbs throughout are taken from popular Spanish and Italian folklore.
Cervantes' experiences as a galley slave in Algiers also influenced Quixote.
Medical theories may have also influenced Cervantes’ literary process. Cervantes had familial ties to the distinguished medical community. His father, Rodrigo de Cervantes, and his great-grandfather, Juan Díaz de Torreblanca, were surgeons. Additionally, his sister, Andrea de Cervantes, was a nurse.  He also befriended many individuals involved in the medical field, in that he knew medical author Francisco Díaz, an expert in urology, and royal doctor Antonio Ponce de Santa Cruz who served as a personal doctor to both Philip III and Philip IV of Spain. 
Apart from the personal relations Cervantes maintained within the medical field, Cervantes’ personal life was defined by an interest in medicine. He frequently visited patients from the Hospital de Inocentes in Sevilla. Furthermore, Cervantes explored medicine in his personal library. His library contained more than 200 volumes and included books like Examen de Ingenios by Juan Huarte and Practica y teórica de cirugía by Dionisio Daza Chacón that defined medical literature and medical theories of his time. 
Spurious Second Part by Avellaneda
It is not certain when Cervantes began writing Part Two of Don Quixote, but he had probably not proceeded much further than Chapter LIX by late July 1614. About September, however, a spurious Part Two, entitled Second Volume of the Ingenious Gentleman Don Quixote of La Mancha: by the Licenciado (doctorate) Alonso Fernández de Avellaneda, of Tordesillas, was published in Tarragona by an unidentified Aragonese who was an admirer of Lope de Vega, rival of Cervantes. It was translated into English by William Augustus Yardley, Esquire in two volumes in 1784.
Some modern scholars suggest that Don Quixote's fictional encounter with Avellaneda in Chapter 59 of Part II should not be taken as the date that Cervantes encountered it, which may have been much earlier.
Avellaneda's identity has been the subject of many theories, but there is no consensus as to who he was. In its prologue, the author gratuitously insulted Cervantes, who not surprisingly took offense and responded; the last half of Chapter LIX and most of the following chapters of Cervantes' Segunda Parte lend some insight into the effects upon him; Cervantes manages to work in some subtle digs at Avellaneda's own work, and in his preface to Part II, comes very near to criticizing Avellaneda directly.
In his introduction to The Portable Cervantes, Samuel Putnam, a noted translator of Cervantes' novel, calls Avellaneda's version "one of the most disgraceful performances in history".
The second part of Cervantes' Don Quixote, finished as a direct result of the Avellaneda book, has come to be regarded by some literary critics as superior to the first part, because of its greater depth of characterization, its discussions, mostly between Quixote and Sancho, on diverse subjects, and its philosophical insights. In Cervantes' Segunda Parte, Don Quixote visits a printing-house in Barcelona and finds Avellaneda's Second Part being printed there, in an early example of metafiction.
Don Quixote, Part One contains a number of stories which do not directly involve the two main characters, but which are narrated by some of the picaresque figures encountered by the Don and Sancho during their travels. The longest and best known of these is "El Curioso Impertinente" (the impertinently curious man), found in Part One, Book Four. This story, read to a group of travelers at an inn, tells of a Florentine nobleman, Anselmo, who becomes obsessed with testing his wife's fidelity, and talks his close friend Lothario into attempting to seduce her, with disastrous results for all.
In Part Two, the author acknowledges the criticism of his digressions in Part One and promises to concentrate the narrative on the central characters (although at one point he laments that his narrative muse has been constrained in this manner). Nevertheless, "Part Two" contains several back narratives related by peripheral characters.
Several abridged editions have been published which delete some or all of the extra tales in order to concentrate on the central narrative.