The second act takes place the next day in Higgin’s laboratory. He is demonstrating his phonetics system to Pickering when the housekeeper, Mrs. Pearce, interrupts to tell him that a young girl would like to see him. Hoping that he can demonstrate his process on this visitor, Higgins asks that she be shown in. To his disappointment, the woman is Eliza. He tries to dismiss her, as he already took notes on her dialect, but Eliza is persistent. She expresses her desire to pay for lessons so that she can talk like a lady and get a job in a flower shop. Despite his earlier boast, Higgins has no interest in her offer. Pickering, though, is intrigued and proposes a bet with Higgins: Pickering will pay for the lessons and all other costs if Higgins succeeds in passing Eliza off as a duchess. The two men agree, and Eliza is sent off with Mrs. Pearce.

Mrs. Pearce begins trying to refine Eliza’s manners, with an emphasis on hygiene and clothing. When asked to remove her clothes to take a bath, Eliza balks, as she never had a bath or completely removed all of her clothes to change and, thus, considers nakedness immodest.