After leaving the police department, Holly visits a late-night, very empty sleazy cabaret bar, where he buys a drink while watching the floor show of a lone stripper with pasties twirling around. Female hostesses at the bar watch him suspiciously. He purchases two huge bunches of chrysanthemums from an old flower peddler as he leaves.

The scene dissolves to Anna's face as she hears a knock on her apartment door. In the shadows, she mournfully wears Harry's striped pajamas in bed - monogrammed with HL on the left front. She opens her flat's door to a drunken Holly still holding the bunches of flowers. The worldly actress thought he was going to keep away, but he wants to "say goodbye" before he suddenly pushes off to return home:

Anna: Why?
Holly: (sadly resigned) That's what you've always wanted, all of you.

Holly dangles the flower strings to tease Anna's cat, who jumps off the bed unsociably. Anna explains how the cat was only responsive and purred for Harry: "He only liked Harry." [Note: The repeated use of the independent-minded cat is a symbol of the sinister Harry Lime - the film's little-seen character. Also note that in this extended scene, three different cats were used.] He offers her the flowers, and she notices the bandage on a finger of his right hand. Both of them now know from Major Calloway "about Harry" and his sordid blackmarketing activities. Then, Holly calls out to Anna's cat, but the cat ignores him and jumps out the window.

In a memorable series of images, the camera moves through the plants at the window sill and out to a view of the darkened, wet street. A man looks up at the window and then ducks into a darkened, night-shrouded doorway. Anna's cat has run from her apartment to the cobble-stoned street, and into the shadows of the darkened gateway to circle and snuggle next to the person's shoe in the doorway. The cat's nestling against the shoe tips off the presence of a person there. The cat meows, purrs, and strokes the shoe - prompting the thought that the cat might have located Harry.

Although she can't bear criticism of Harry, Anna now believes, as Holly does, that Harry is "better dead. I knew he was mixed up, but not like that." However, she hasn't changed her feelings or opinion of her lover Harry: ("A person doesn't change because you find out more"). Holly is bitter that his good friend was engaged in a deadly racket, and has also decided to give up his intense search for who killed Harry Lime and why:

Holly: I knew him for twenty years, at least I thought I knew him. Suppose he was laughing at fools like us all the time?
Anna: He liked to laugh.
Holly: Seventy pounds a tube. He wanted me to write for his great medical charity...Perhaps I could have raised the price to eighty pounds for him.
Anna: Oh please, for heaven's sakes, stop making him in your image. Harry was real. He wasn't just your friend and my lover, he was Harry.
Holly: Well, don't preach wisdom to me. You talk about him as if he had occasional bad manners. Oh, I don't know, I'm just a hack writer who drinks too much and falls in love with girls - you.
Anna: Me?
Holly: Don't be such a fool, of course.
Anna: If you'd rung me up and asked me were you fair or dark or had a moustache, I wouldn't have known.
Holly: I am leaving Vienna. I don't care whether Harry was murdered by Kurtz or Popescu or the third man. Whoever killed him, there was some sort of justice. Maybe I would have killed him myself.
Anna: A person doesn't change because you find out more.

By now, the doltish hack writer has hopelessly fallen in unrequited love with the melancholy Anna, Harry's mistress, but she is unresponsive to his clumsy advances and the feelings she has for him are not mutual. She laughs once at him, but explains: "There isn't enough for two laughs." He comes close to her and offers himself to her, as teardrops well up in Anna's eyes:

I'd make comic faces and stand on my head and grin at you between my legs and learn all sorts of jokes. Wouldn't stand a chance would I? Hmmm? Well, you did tell me I ought to find myself a girl.

But Anna doesn't respond to his advances.

The scene dissolves to the street outside Anna's apartment, where Holly walks away. He becomes aware of a figure in a doorway on the opposite side of the street when he hears Anna's cat meow loudly at the feet of the silent, motionless figure obscured there. The figure's big shoes are illuminated - is it one of Calloway's men, Popescu, Kurtz, another thug or Intelligence agent? Holly abusively, drunkenly, and defiantly shouts out to the figure:

What kind of a spy do you think you are, satchel-foot? What are you tailing me for? Cat got your tongue? Come on out. (He gestures.) Come out, come out, whoever you are. Step out in the light. Let's have a look at ya. (The cat licks its paw.) Who's your boss?

A light from an irritated neighbor's upstairs window briefly illuminates the figure's face - shining straight across the street. Holly momentarily and suddenly sees Harry - the 'third man' himself. [Harry's dramatic, introductory entrance occurs over one hour into the film's story. The third man, whom Holly suspected was responsible for Harry's "accidental" death, is found to be both a fictional murderer and the actual murderer of thousands of penicillin-dependent war victims.]

Amazed to see Harry still alive, Holly is startled by the flirtatious, mocking sight of the smiling, smug face of his friend staring back at him, with a raised eyebrow.

[Harry stage-managed his own death to throw the authorities off his trail so he could continue his illicit black market trade/racketeering in the shadowy narrow streets of the dislocated society. Holly's discovery, finding Lime cast in a light, demonstrates he has been more successful in finding out about Harry's 'demise' than his goal of impressing Anna.]

The light is extinguished, and before Holly can reach his friend, a car approaches and blocks his path by coming between them. The figure makes off and vanishes to the sound of retreating footsteps in the dark as Holly finds the doorway empty by the time he crosses the street.

Holly immediately informs Calloway and the Sergeant who are brought to the scene where Harry had vanished in the empty moonlit square. Assuming that Holly is drunk, Calloway realizes that Holly is telling the truth when he finds that the kiosk or booth in the middle of the square has a door that leads down a dark curling staircase into the vast underground network of Viennese sewers - a strange world into which Harry vanished. They move through the passageways and next to a cavernous waterfall fed by rushing streams - the Sergeant identifies their location: "It's the main sewer. Runs right into the blue Danube. Smells sweet, doesn't it?" The scene dissolves as Calloway mutters: "We should have dug deeper than a grave."

That night in the cemetery, Lime's coffin is disinterred, the lid is removed, and the body is found to be that of police informant Joseph Harbin, the medical orderly who had acted as a police informer against Lime: "He used to work for Harry Lime." Calloway tells Holly: "He's the man I told you was missing. Next time, we'll have a fool-proof coffin."

Anna is brought from her apartment (where she is still crying in bed wearing Harry's PJs) to the International Police Headquarters by Russian officers in the middle of the night. She assumes she is being charged for having a forged passport. As she is brought up the steps of the police headquarters, Holly shouts out to her that he's seen Lime: "I've just seen a dead man walking. I saw him buried, but now I've seen him alive." In Calloway's office, she is visibly stunned and seeks confirmation that Harry is still alive. She is asked when she last saw Lime and to divulge information regarding Lime and his whereabouts in exchange for her own freedom from deportation to the Russians ("If you help me, I am prepared to help you"). Her rejoicing over the news about Harry is suddenly gone: "Poor Harry. I wish he was dead. He would be safe from all of you then."

Confronting Kurtz and Dr. Winkel, the other two at the scene of Harry's accident, Holly tells them to arrange a meeting between himself and the elusive Harry at an almost-deserted, dejected, once-bustling Prater amusement park in Vienna, next to the big Ferris Wheel (a place of childish self-indulgence). And then he sarcastically taunts them: "Or do ghosts only rise by night, Dr. Winkel? Do you got an opinion on that?"

The next, most famous legendary scene in the film is the gripping confrontation between the suave, unrepentant and evil Harry and Holly high above the Russian sector on a ferris wheel. [This is the first of two times when Holly comes face-to-face with Harry in symbolic settings.] In the light of the day, Lime emerges and greets Holly with a bemused look: "Hello, old man, how are you?" They both ride high above the ground on the ferris wheel that is still operating in the midst of the dark city - it is the last ride of Holly's symbolic childhood.

As they rise higher in the car which they have all to themselves, Holly explains how he has already informed the police and Anna about Harry's charade and disappearance. Harry shows how uncaring he can be about Anna's predicament after betraying her to the Russians: "What can I do, old man? I'm dead, aren't I?" Harry explains how he doesn't wish to be a hero:

What did you want me to do? Be reasonable. You didn't expect me to give myself up...'It's a far, far better thing that I do.' The old limelight. The fall of the curtain. Oh, Holly, you and I aren't heroes. The world doesn't make any heroes outside of your stories.

Harry claims he only has immunity in the neutral Russian zone of Vienna. Harry also admits that he was the one who informed the Russian police about Anna’s forged passport as payment for them letting him hide out in the Russian sector. Holly confronts Harry with disgust for betraying Anna: "So that's how they found out about Anna. You told them, didn't you?" Lime expresses his continuing concern that Holly is speaking to the police: "Old man, you never should have gone to the police, you know. You ought to leave this thing alone."

Knowing of his cynical dealings on the black market, Holly mentions Harry's involvement in racketeering and corruption (the light side exposing the dark side). Holly asks if he has ever seen any of his victims - children who populate the hospital wards [in a city and amusement park desolate of playful, happy children]. With little remorse, Harry looks contemptuously down from the ferris wheel at the scuttling mortals below, cheerfully calling the people unrecognizable "dots" from the height of the ride:

Harry: Victims? Don't be melodramatic. (He opens the door to the car.) Look down there. Would you really feel any pity if one of those dots stopped moving forever? If I offered you 20,000 pounds for every dot that stopped, would you really, old man, tell me to keep my money? Or would you calculate how many dots you could afford to spare? Free of income tax, old man, free of income tax. The only way you can save money nowadays.
Holly: A lot of good your money will do you in jail.
Harry: That jail's in another zone. There's no proof against me, besides you.

They reach the very top of their ride on a child-oriented attraction, and for a few ominous moments [in a very different kind of amusement-thrill ride], Harry threatens Holly. He contemplates executing his uncooperative friend and making him one of the "dots" below because he is the only one with living proof of his existence: "There's no proof against me, besides you." Harry suggests that he could easily shoot him - a bullet hole in a corpse that had fallen from so high up in the wheel would not be found. Holly wraps his arm around a door frame and clutches it for protection:

Holly (looking out the window): I should be pretty easy to get rid of.
Harry: Pretty easy.
Holly: I wouldn't be too sure.
Harry: I carry a gun. You don't think they'd look for a bullet wound after you hit that ground.

But Holly counters the threat by mentioning that the police are already on Harry's trail - they have dug up the corpse and discovered it wasn't him but Harbin. Harry is startled that the body of his cohort has been disinterred and his voice suddenly drops. As the car journeys downward, Lime closes the door, discards his deadly plan to dispose of Holly by tossing him out of the car, and then compares himself to governments:

Harry: Nobody thinks in terms of human beings. Governments don't. Why should we? They talk about the people and the proletariat, I talk about the suckers and the mugs - it's the same thing. They have their five-year plans, so have I.
Holly: You used to believe in God.
Harry: Oh, I still do believe in God, old man. I believe in God and Mercy and all that. But the dead are happier dead. They don't miss much here, poor devils. (He traces Anna's name and the image of a heart with an arrow through it on the window of the car.) What do you believe in? Oh if you ever get Anna out of this mess, be kind to her. You'll find she's worth it.

When they reach the end of their ride and exit the ferris wheel on the ground, Lime offers his boyhood pal a partnership in his illicit business:

Holly, I'd like to cut you in, old man. There's nobody left in Vienna I can really trust, and we've always done everything together. When you make up your mind, send me a message - I'll meet you any place, any time, and when we do meet old man, it's you I want to see, not the police. Remember that, won't ya? Don't be so gloomy. After all, it's not that awful. Remember what the fellow says:

Then, he smugly delivers his famous, perverse monologue about Switzerland and cuckoo clocks [penned by Welles himself]. With murderous fluency, he contemplates the greater productivity of a warring, strife-ridden culture and civilization that is plagued by warfare and violence, versus a peaceful one. The corruptible Lime cynically justifies his black market criminal activities by recognizing that despite appearances, good and evil (black and white, peace and war, up and down, etc.) are complementary concepts. [Indeed, black marketing becomes a real necessity in an economy that faces severe shortages.] The monstrous Lime, with a charming and beguiling smile, equates the corrupt political intrigues of the Borgias to the artistic triumphs of Michelangelo and da Vinci:

In Italy for thirty years under the Borgias, they had warfare, terror, murder, bloodshed - but they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland they had brotherly love. And in 500 years of democracy and peace, and what did that produce? The cuckoo clock. So long, Holly.

After their dark ride together, Holly is still reluctant to set up Lime for an arrest by Calloway: "Don't ask me to tie the rope." But he does decide to set up Lime (by agreeing to a meeting with him at a little cafe in the International Zone) in exchange for Anna's freedom from deportation to the Russians (because of her forged passport) after Calloway asks him to name his "price."

Anna is brought by Sgt. Paine to the Vienna Railway station, where she boards a train to take her away, to be saved from the Russian authorities. Before leaving, she sees Holly in the track-side cafe, and learns from him that he is betraying their mutual friend to the police in return for helping to get her out of Vienna safely - she is disgusted and furious. She remains faithful to Harry no matter what she knows about him, even if her own freedom is at stake. Out of ignorance and her dedication to her role as the doomed man's mistress, Anna doesn't want to betray or sell out Harry, because she loves him for what he is:

Anna: What are you doing here?
Holly: l wanted to see you off....
Anna: How did you know l'd be here?
Holly: Why, l heard something about it at police headquarters.
Anna: Have you been seeing Major Calloway again?... What's on your mind? Why did you hide here?...What's going to happen? Where is Harry?
Holly: He's safe in the Russian zone....
Anna: Did you tell Calloway about me to Harry?....Why are you lying?
Holly: We're getting you out of here, aren't we?
Anna: I'm not going!
Holly: Anna, don't you recognize a good turn when you see one?
Anna: You have seen Calloway! What are you two doing?
Holly: Well, they, they asked me to help take him. I'm helping.
Anna: Poor Harry.
Holly: Poor Harry? Poor Harry wouldn't even lift a finger to help you.
Anna: Oh, you've got your precious honesty and don't want anything else.
Holly: You still want him.
Anna: I don't want him anymore. I don't want to see him, hear him. But he's still a part of me, that's a fact. I couldn't do a thing to harm him. (The train whistle sounds as the train leaves the station.)
Holly: Oh Anna, why do we always have to quarrel?
Anna: If you want to sell your services, I'm not willing to be the price. I loved him. You loved him. What good have we done him? For love! Look at yourself. They have a name for faces like that?

Anna has angrily ripped up her ticket and new passport and allows the train to depart with her luggage and belongings.

Back at Calloway's headquarters, Holly asks for the first plane out of Vienna that night and returns Anna's ripped up passport. Calloway deduces: "So she talked you out of it." Holly returns Anna's ripped up passport, and asks Calloway and Paine to take him to the airport, but on the way, Calloway detours and takes the unsuspecting writer on a tour of a children's hospital, where he sees the victims of pusher Lime's penicillin racket - there are many cases of sick, dying children who were treated for meningitis with diluted, faulty penicillin - a discarded teddy bear signifies another result of Lime's destructiveness.

On their ride away from the hospital, Holly admits sullenly: "All right, Calloway, you win...I'll be your dumb decoy duck." At last, Holly (who had always been Lime's friend for what he imagined him to be) sees the dark side of his friend and is willing to betray him - his American innocence, illusions, and blindness to Harry's crime are dying. Holly arranges to meet Lime with police staked out to entrap and arrest the black marketeer.

At Cafe Marc Aurel, Holly sits drinking coffee while waiting for his friend to arrive. The streets surrounding the cafe are filled with police and guards, surreptitiously prepared to capture Harry. The inconspicuous presence of the police officers is betrayed by an old, nighttime balloon-seller who pesters them for a sale of a child's balloon (the balloon-seller casts a gigantic shadow on a wall's surface when he first wanders onto the scene). Harry appears next to a crumbling chimney stack on a rooftop where he looks down at the deserted square and cafe window (where Holly waits for him).

Anna joins Holly at the Cafe (after learning about his location from Kurtz as he is being arrested). Holly is upset when Anna appears in the Cafe:

Holly: You should have gone. How did you know I was here anyway?
Anna: From Kurtz. They've just been arrested. But Harry won't come. He's not a fool...Don't tell me you are doing all this for nothing. What's your price this time?
Holly: No price, Anna.
Anna: Honest, sensible, sober, harmless Holly Martins. Holly - what a silly name. You must feel very proud to be a police informer.

As she speaks, Harry has quietly entered the back door of the Cafe, and after hearing the word informer, he frowns. Anna turns and sees Harry, and warns the fugitive to flee: "Harry, get away. The police are outside. Quick." Harry has drawn his gun and signals Anna to move out of the line of fire between himself and Holly. But the Sergeant enters the front door of the Cafe before he can shoot and scares Harry out the back door.

In the exciting breathtaking closing, there is a thrilling, extraordinary chase sequence, first through rubble and bomb-sites and down an open manhole, and then into the subterranean dark sewers and tunnels under Vienna that still link all the occupied sections of the city. The climactic scenes are sharply edited for greater impact. The sewers are the dark, unobserved haunt of Lime, symbolically under the city [symbolic of Hades itself], where his 'underground' evil-doings have permeated through the borders of the city's zones. In the manhunt by an international police force composed of police from all four nations, they climb down into every available manhole. The filming captures the dark shadows on the ancient tunnel walls and the cobblestone surfaces. After a long pursuit sequence, Harry shoots the Sergeant dead with the gunshots echoing off the tunnel walls. Lime is shot and wounded by Calloway as he scrambles away.

As Harry, the fugitive, makes another break to escape, he is caught and cornered like a rat in the bowels of Vienna. He crawls up a circular iron stairway to reach a grill-covered man-hole - his fingers clutch, curl, strain and poke through the sewer grill grating (filmed from the street level) as he desperately tries to push it up, but he has been weakened by his wound and is unable to move the solidly-jammed grill cover. [Note that in the previous scene, Harry was holding a gun in one hand - and now impossibly places all ten fingers through the grating. The fingers reaching for escape are those of director Carol Reed.] Holly notices Harry at the top of the iron stairway beneath the grating, and finds his old friend struggling there, in great pain and fear. Calloway shouts out from a distance: "Martins, don't take any chances, if you see him, shoot."

Harry looks down and sees Holly looking up at him. Harry wordlessly appeals to his friend, making a wink-like gesture or nod, to shoot. Ironically, it has been left to Holly to kill his oldest friend, a man with a name similar to his (often confused by Anna herself). A gunshot sounds offscreen and Calloway halts. Holly's silhouette appears at the end of the smoky tunnel - he has pulled the trigger and shot his friend dead - an ending typical of a Western tale. He has treacherously murdered and betrayed his oldest, closest and trusted friend.

[As he told Popescu in the lecture question session, Holly's next novel - "The Third Man," will be born out of his experiences with evil, corruption, and the shadowy dark world. His innocence changed forever, his next novel will be written with social responsibility - unlike any of the pulp, children's Western or "cheap novelettes" he has written before. Like Michelangelo and da Vinci and others, Holly will produce more than just another 'cuckoo clock' story of the Wild West. Just as Harry had said, a cultural work of art could be brought forth from darkness. The completed film, in retrospect, is his new work of art - Holly has narrated his own story - and next novel, The Third Man.]

The story comes full circle - Lime is buried in the cemetery and Martins is driven off from the cemetery by Calloway for a second time. Major Calloway, who plans to get Holly to his afternoon plane out of Vienna after the ceremony, attempts to talk Holly out of saying goodbye to Anna. She is ahead of them and walking from the cemetery down the road, lined with bare autumn trees.

Holly (while looking ahead down the road at Anna's receding figure): Calloway, can't you do something about Anna?
Calloway: I'll do what I can - if she'll let me. (They pass Anna on the road.)
Holly: Wait a minute. Let me out.
Calloway: Well, there's not much time.
Holly: One can't just leave. Please. (Calloway stops the jeep and Holly gets out.)
Calloway: Be sensible, Martins.
Holly: Haven't got a sensible name, Calloway.

In the famous closing sequence, a bleak and uncompromising, unromantic ending (bookending the opening scene at the cemetery), Holly leans on a cart and waits on one side of the tree-lined cemetery road for Lime's loyal, former lover Anna as she leaves Harry's funeral on foot. Off in the distance, she is walking and approaching toward him down the empty avenue, first a dot, then a shadow, and then a full figure - in an extremely long-held stationary shot. As he seeks in vain for any response from her, she stoically ignores him and continues by, passing him without paying any attention - without a pause, a look, a word, or a gesture. Her defiant response is a simple judgment upon his betrayal of a friend, similar to the attitude of Harry's unsociable cat. Holly follows her with his eyes, but she stares impassively ahead, walking out of his life and abandoning him. He lights a cigarette as the film fades out to black.