In section 2, Haller goes through the streets searching for the man with the signboard about the Magic Theater. On his way, he sees a funeral procession at St. Martin's. It seems that the mourners are pretending to be sad; they do not appear to be genuinely sorry for the man who has died. Next, Haller meets a professor who is a former acquaintance. The professor invites him to spend an evening with him. When Haller agrees, they go to the professor's house. The professor criticizes an article he has read in the newspaper; he does not know that he has hurt Haller's feelings, for Haller has written the article. Haller then criticizes a sentimental portrait of Goethe in the professor's house, which hurts his host's feelings. Haller apologizes and leaves.

Section 3 tells about Haller's acquaintance with Hermine. Reduced to his baser self, he has an affair with Hermine in order to release his suppressed sensuality. The torrid relationship makes Haller feel that he has literally walked through hell. He even considers suicide, but exercises his will to overcome the urge. Haller also has an important dream about Goethe during the section.

Section 4 deals with Haller's new way of life. While living in a boarding house, his landlady pays a real tribute to Haller by saying that she has had many tenants in the past who were "jewels of respectability," but none has been quieter or more respectable than Haller. Haller's higher nature is pleased with the compliment, but he is aware that the werewolf still exists inside him. He has another meeting with Hermine and afterwards can think of nothing but her. Haller also meets Pablo, a jazz musician; the sensual, cacophonous music of his saxophone appeals to Haller.

Section 5 deals with Haller's interactions with Pablo and Maria, who is Hermine's friend. For much of the section, Haller reflects on his life and his understanding of the "Treatise of Steppenwolf," which deals with the multiple selves in the human personality.

Section 7 deals with the Magic Theater. As the Director of the Magic Theater, Pablo leads Haller through a variety of peepshows in which parts of his personality are acted in pantomimes. He sees Hermine lying in Pablo's arms and kills her in a fit of jealousy. He is ready to accept the punishment of death for his action. Then he realizes that it is all an illusion. He accepts that his longing for eternity is simply the wish to be rid of his split personality. Haller then witnesses a strange game of chess, played by an unknown master. Instead of chessmen, pieces of personality are continually rearranged on the board; in each game a new self can be built up. As a result of his experiences, Haller is able to tame the Steppenwolf within him. The pilgrimage through the "inferno of inner self" has really been a trip through a hall of trick mirrors; but in the process, he has realized that he should learn to really live and laugh.

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