The players discover Peter hiding and the kindly Desmonds, who run the playing company, take him on as a boy actor. Another boy, Kit Kirkstone, also joins the company.
Kit proves excellent at playing female roles while Peter acts as an understudy. After Peter's jealousy leads to a fight, he discovers Kit's secret. Kit is actually a girl in disguise, really called Katharine Russell, who is running away to avoid a forced marriage to Sir Philip, who is only interested in her inheritance.
The company breaks up and the Desmonds promise to take Peter and Kit to a London theatre company. When Mr. Desmond breaks his leg in a river accident, the youngsters go on ahead. However, Kit almost reveals her true identity to a crowd of observers after swimming down the river to rescue Mr. Desmond but Peter distracts everyone and saves her. After being initially turned away by Richard Burbage of the Lord Chamberlain's Men, they are accepted as apprentices by the playwright William Shakespeare, who recognises Kit's acting ability and Peter's gift of mimicry. They perform in various plays and see Sir Philip in the audience during Romeo and Juliet.
Peter's copy of Shakespeare's new play Henry V is stolen by the "Yellow Gentleman", and Kit and Peter worry that he plans to profit from the unpublished play. While stealing back the script, Peter overhears a discussion between the thief and another man, sounding very treasonous. He also notices an odd poem written