Feste the Fool encounters Sebastian, whom he believes to be Cesario. Feste says that Olivia had sent for Cesario, and Sebastian remains ignorant, insisting that the Fool “know’st not me” (IV.1.11). Andrew, Toby, and Fabian enter, and, they too mistake Sebastian for Cesario, and Andrew attacks Sebastian with his sword. Sebastian, unlike Viola dressed as Cesario, can actually fight and returns Andrew’s blow. Toby seizes Sebastian, who pulls away from him and draws his sword against Toby. As they prepare to fight, Olivia enters and shoos Toby and his friends away. She apologizes to Sebastian (whom she too mistakes for Cesario) and invites him to go with her to her house. Sebastian, smitten with Olivia, embraces her advances and leaves with her saying in an aside, “I am mad, or else this is a dream. […] If it be thus to dream, still let me sleep!” (IV.1.64-66).

Maria helps Feste disguise himself as Sir Toby and visit Malvolio in the dark room where he’s being held. Malvolio insists to Feste, whom he believes is Toby, that he’s not insane, telling him that “there never was a man thus abused.