Upon Loris-Melikov's return, Hadji Murat continues his story, describing Hamzad's violent rise to power by killing the Khans and seizing their lands. In revenge, Hadji Murat and his brother, Osman, plotted to kill Hamzad during a mosque event; they succeeded, but Osman lost his life in the process.

Following Hamzad's death, Shamil rose to power and sought Murat's support against the Russians. Murat, however, declined Shamil's offer of an officer's rank and was imprisoned. Murat escaped, though it left him wounded and with a limp, and he was beckoned by the Avars to assume leadership.

Hadji Murat shares with Loris-Melikov letters from Russian General Klugenau, in which the general offers protection and urges Murat to trust the Russian government. However, Murat remains skeptical of the Russians and loyal to his people. He explains that although there was no friendship between him and Shamil, Shamil relied on him due to fear and necessity. A disagreement between them over who should be the next Imam escalated tensions; Murat suggested that the next Imam would be determined by the strength of one's sword, leading Shamil to threaten Murat's life and capture his family. This threat forced Murat to defect to the Russians and seek an alliance with Vorontsov.