Emily wakes up and is cheered to find that the scenery outside of the castle is very beautiful. However, she is alarmed to see that the door leading to the secret passage has been closed. Emily worries that this means someone has been in her room, and at breakfast, she asks Montoni to move to another room. He refuses, and tells her that she is being silly. Emily spends the day wandering around the castle, and sees that Montoni has been joined by Cavigni and Verezzi. Emily is more and more worried that Morano is going to show up at the castle, while Annette is distracted by the presence of Ludovico, a handsome servant who works for Cavigni. Emily feels herself drawn back to the veiled portrait, and cautiously lifts the veil. Whatever she glimpses causes her to collapse to the floor in a faint.
Emily decides not to mention what she has seen to anyone. Everyone seems tense at dinner, and later that evening, they glimpse a large gathering of hired soldiers marching past the castle. Emily stays up late because she is anxious about sleeping in the room, and around midnight she hears someone arriving at the castle. Annette confirms that the new guest is Morano. Not knowing what else to do, Emily finally goes to sleep only to wake up in the middle of the night and find Count Morano in her bedroom. He declares his love for her, and explains that Montoni has stolen her away from him, and that he now wants her to escape with him. Emily is fearful to learn that Montoni has come up with a new plan for her fate, but she refuses to go with Morano. Eventually, Montoni and his servants burst into the room; Morano and Montoni fight, and Morano is wounded in the arm. Montoni orders that Morano be taken out of the castle, and his servants rush him away. Montoni accuses Emily of having conspired with Morano to run away with him; Emily is hurt and offended, and also disturbed by how little her aunt seems to care about what is going on.
The narrative shifts away from Udolpho to provide backstory. Morano misled Montoni about his wealth in order to marry Emily; Montoni hoped that through the marriage, he would gain access to Emily's estate in Gascony. However, the night before the marriage, Montoni learned that Morano had very little money, and became worried that Morano would take the estate for himself. Montoni rushed the family away to Udolpho in hopes of being able to leverage an agreement wherein Morano would give him Emily's estate. Morano, sure enough, was furious and rushed to Udolpho. However, after meeting with Montoni, Morano became concerned that Montoni was never going to give Emily to him, so he decided to hatch the plan to kidnap her. The plan was foiled because Carlo heard servants gossiping about the plans and alerted Montoni.
Back in the present, Annette wants to show Emily a picture of the woman who owned Udolpho prior to Montoni. Emily is fixated on the veiled portrait, and surprised to learn that Annette is talking about a different portrait, which is a straightforward depiction of a beautiful woman. Emily also learns that Madame Montoni is very upset because Montoni is bullying her to give him all of her property and wealth. The more she refuses, the worse he treats her. Emily suggests that her aunt agree to his demands if it will make the situation easier, but Madame Montoni refuses. She also points out that if she retains her property, it will go to Emily upon her death. This information just makes Emily more nervous, since she knows that Montoni is in a precarious financial position, and that he would benefit from the death of both her and her aunt. While Emily frets in her room, Montoni is having dinner with his friends downstairs. Verezzi brings up the fact that Morano had hinted that Montoni was a murderer who had acquired the castle through nefarious means. Montoni is annoyed, and explains that he genuinely wanted to marry Signora Laurentini, but that she loved someone else. He believes she killed herself, although her body was never found, and he does not give many details about what happened.
After Emily's departure for Italy, Valancourt moped around Gascony for awhile, but eventually moved to Paris with his regiment. He gets caught up in the social whirl, and starts to spend a lot of time with the Countess Lacleur, a beautiful young noblewoman. He also spends a lot of time with the Marchioness Champfort.
At Udolpho, Montoni and Madame Montoni are fighting all the time, and Annette is increasingly worried about the threat of war and violence. Emily also finds Annette passed out one night, having fainted out of fear after seeing a mysterious figure passing into a locked room. Eventually, Montoni becomes so frustrated that he announces he is going to imprison Madame Montoni in the the east turret of the castle. This news sends Madame Montoni into a kind of fit, and when Emily tries to help her aunt, Montoni knocks her down and she injures her forehead. Nonetheless, Madame Montoni refuses to sign the papers, and Emily cannot conciliate either her aunt or her aunt's husband.
At a dinner where all of the castle guests are gathered, a glass shatters, leading Montoni to think someone is trying to poison him. Chaos and fighting breaks loose; Emily and her aunt flee to their room, but Montoni drags his wife out to the east turret. Emily faints; when she wakes up, she finds Annette crying in a locked room. Ludovico shut her up for her safety, but has not been seen since. Emily cannot access the room to let Annette out, and is preoccupied with trying to find her aunt. She makes her way to the east turret, where she is horrified to see blood on the steps leading up to the turret door. No one comes when she knocks and calls for her aunt, and Emily becomes convinced that her aunt has been killed. The next day, she begs Montoni to release Annette, and also to tell her where her aunt is. Montoni readily agrees to let Annette out, but won't give her any information about her aunt. A few days after Annette's release, she tells Emily that Orsino has now arrived at the castle. She also tells Emily that the castle porter, Barnadine, can take Emily to see her aunt if she will meet with him late at night. Emily is nervous, but later that night, she meets with Barnadine on the castle ramparts. He wants to tell Emily what happened to her aunt, and initially makes it sound as though he was the one who carried out her death. However, he reassures her that Madame Montoni is alive, and being held captive. He offers to take Emily to see her if she will meet him the following night, and Emily agrees, although she worries that she is being lured in to a trap, and does not fully trust Barnadine.
In keeping with the title of the novel, Udolpho quickly becomes a place where Emily and the reader have a hard time maintaining a solid grasp on reality. Montoni partially relies on keeping Emily terrified and overwhelmed as a way to maintain control over her, and perpetuating the idea that she is timid and silly girl whose fears are fundamentally unreasonable. While Emily is indeed timid, the lack of external validation for what she thinks may be encouraging her imagination to run wild. By this point, Emily's only real companion and source of information is Annette. In the earlier portions of the novel, Emily usually had the companionship of either her father, Valancourt, or both to help her make sense of what was happening around her. While male presences such as Montoni are indisputably a threat, the absence of a rational masculine aspect to her life leads Emily to become more vulnerable. As a servant, Annette is not well-educated, and thus she has a hard time separating what is plausible from what is not. In her interactions with Annette, Emily usually has to take on the role of one who is more reasonable and skeptical. She often does this successfully on the surface, but deep down, she is contaminated by Annette's fearfulness. Emily lived an isolated life at La Vallee, but that isolation provided protection, whereas isolation at Udolpho leads to oppression. As Mary Poovey explains, "Udolpho is the sinister inverse of La Vallée, an enclosure whose boundaries oppress rather than protect, a prison which shelters hatred rather than love, a bastille which excludes both law and moral nature itself" (319).
Emily's unease is also increased by the incident with the black veil. Radcliffe masterfully creates suspense by withholding from the reader whatever it is that Emily sees or thinks that she sees. This actually heightens the impact of the terror because the reader becomes a participant by drawing on their own fears, and whatever they imagine would be most horrifying. Given the mysterious disappearance of Signora Laurentini, it seems possible that Emily could see something related to her death, but whatever lurks behind the black veil seems to imply a dark fate. Montoni's own version of the Signora's fate seemingly absolves him of foul play, but if the young woman did kill herself, her ghost might well still be haunting the castle. Moreover, Montoni might be lying—and even if he didn't kill that one woman, it doesn't necessarily follow that he wouldn't be willing to kill others.
Emily is temporarily sidetracked by the dangers of an external rather than internal threat: Morano's attempt to abduct her. By this point, Emily's options are either being trapped in a castle with a dangerous man, or being kidnapped by a dangerous man. Life at Udolpho is marginally safer for her, but the fight between Morano and Montoni confirms that Montoni is well supported by his gang of thugs, and that he has a strong desire to control Emily's fate and use her for his own ends. The confrontation between the two men also shows the extent to which Emily has been objectified; Morano and Montoni see her as a way to gain money and power, but neither is interested in her well-being or her own desires. She is treated like a prize to be fought over and won.
Emily's vulnerability is heightened by the increasing tension between her aunt and Montoni. Because their marriage was formed from selfish motivations and a lack of any real connection, it quickly deteriorates. While Madame Montoni is not initially a sympathetic character in the novel, she is now in a pitiable situation, and Emily shows her kindness and a compassionate heart by trying to help her aunt. Madame Montoni's insistence on maintaining her property and money, and passing it down to her niece, signals a type of proto-feminist resistance within the text. Whatever happened to Signora Laurentini, she was not able to successfully resist Montoni's attempts to usurp her property; likewise, it will later be revealed that the Marchioness de Villeroi was also not able to resist a marriage she tried to reject. Mary Laughlin Fawcett explicitly draws a parallel between the unhappy marriages of the two sisters, the Marchioness and Madame Montoni, pointing out that "Mme. Montoni, with her unfeeling pride and stupidity, and the Marchioness, her eyes mildly raised to heaven, present themselves to us much more vividly than Emily's own mother, as two versions of the effect sexual experience has on women. Though neither woman is Emily's mother, both are, during this narrative, paradoxically both newly married and old enough to be her mother" (485).
Nonetheless, Madame Montoni tries to stand her ground, even knowing what her husband is capable of. Interestingly, Emily becomes the one who urges compliance and submission. She has no interest in wealth, and by this time, she is preoccupied with maintaining the physical safety of her aunt and herself. In spite of Madame Montoni's resistance, she ends up disappearing under a chaotic set of circumstances which leave Emily unsure whether her aunt is alive or dead. Madame Montoni's fate becomes one more of Udolpho's mysteries, and parallels the equally unclear fate of the Signora. While it would be horrifying if Udolpho was a site where both women definitively died, the castle is somehow worse as a place wherein they simply vanish. Emily does bravely try to investigate her aunt's fate, but is overwhelmed by her own vivid imagination conjuring up ideas of what might have happened. Moreover, in order to try and assess the reality of the situation, Emily has to rely on Barnadine, a suspicious figure. By this point, Emily is finally developing some instincts around whom to trust, but she is also so limited in her resources that she has to ultimately ignore those instincts and take her chances.
Confronted with all of this peril, Emily longs for Valancourt, whom she imagines would heroically save her. Ironically, however, Valancourt has completely fallen away from the trope of the chivalrous hero while living in Paris. Valancourt is so sensitive that being cut off from Emily leads him to abandon his values and integrity. He acts in contradiction to St. Aubert's advice to Emily, and completely gives way to his emotions, rather than focusing on his reason. While it plays out in different ways, much like Emily, Valancourt is also undermined by his sheltered and sensitive nature. He has not been exposed to the temptations and realities of the world, and so he has no skills to cope with these temptations once he is exposed to them.