Prejudiced and acting on a hunch (his "game leg"), Quinlan walks with a huge limp to the Mexican side with other officers - his first visit in years. His investigation is an excuse to visit the strip joint where Linnekar picked up the blonde striptease dancer - his murdered companion. A sign lights up the front of the strip joint: "20 Sizzling Strippers." By this time, Vargas has also returned to Susan, finding her in the lobby of their Mexican hotel. Out on the street, Quinlan makes a racist comment on the ethnicity of Vargas' blonde, fair wife after seeing her for the first time through the hotel's front window: "She don't look Mexican either." To protect Susan's safety while he assists in the investigations, Vargas suggests sending Susan ahead to Mexico City, where he'll soon go for the Grandi drug trial. Susan is visibly upset and sarcastically describes his devotion to duties: "Of course, even on his honeymoon, the chairman of the Pan-American Narcotics Commission has a sacred duty to perform."

Vargas leaves the hotel and runs to catch up to the other police detectives in a shadowy alley. One of Grandi's young gang members named Risto (Lalo Rios) (the son of Vic, the Grandi leader "in the pen") attacks him with a bottle of acid and then runs off. The chemical misses its mark on Vargas's face, exploding instead with a smoky hiss on a peeling poster on the crumbling wall behind him of the victim dancer named Zita. Her portrait is singed with acid (an echo of her death in the burning car explosion). In the strip joint, the Rancho Grande (a play on the name "Grandi"), Quinlan while munching on a candy bar, has a few words with the madam/owner (Zsa Zsa Gabor) ("She only joined the show a few days ago"), while the other officers are attracted to the women.

The detectives leave the modern strip joint and reluctantly say farewell to the prostitutes, following Quinlan out its back door entrance. They find themselves in a wind-drifted, paper-strewn street. There, Quinlan, still munching his candy bar, is attracted (and weakened) by the tinkling sound of a pianola coming from a familiar, local brothel run by his old love and former mistress, Tanya. Glassy-eyed, he mumbles to himself: "Tanya, still open for business?" As he disappears onto the brothel's veranda as a newspaper blows past his head (and an oil derrick rises behind him), the other detectives question Quinlan's interest in the old-world whore of the bordello:

Schwartz: I don't know what Quinlan thinks she's got to do with it.
Adair: Tanya? Oh, maybe she'll cook chili for him, or, uh, bring out the crystal ball.

With a starry gaze and childlike wistfulness, Quinlan walks into the tawdry bordello's parlor, filled with aging articles, stuffed animals, a mounted bull's head on the wall, and Victorian bric-a-brac from the past. In a memorable entrance, the raven-haired, mystical fortune-teller Tanya (Marlene Dietrich), a wise and worldly gypsy madam, appears from a doorway, smoking a small cigar and blowing clouds of smoke. She doesn't recognize him ("you're a mess") under his layers of fat, and speaks in a Germanic-tinged baritone, delivering the first of many drop-dead lines:

Tanya: We're closed.
Quinlan: You've been cookin' at this hour?
Tanya: Just cleanin' up.
Quinlan: Have you forgotten your old friend, hmm?
Tanya: I told you we were closed.
Quinlan: I'm Hank Quinlan.
Tanya: I didn't recognize you. You should lay off those candy bars.
Quinlan: Uh, it's either the candy or the hooch. I must say, I wish it was your chili I was gettin' fat on. Anyway, you're sure lookin' good.
Tanya: You're a mess, honey.
Quinlan: Yeah. That pianola sure brings back memories.
Tanya: The customers go for it - it's so old, it's new. We got the television too. We run movies. What can I offer you?

Quinlan asks her about the bombing incident and if she had heard anything about it. She replies succinctly: "I heard the explosion." He later suggests inviting himself back after investigating the explosion: "Well, when this case is over, I'll come around some night and sample some of your chili." She doubts he is up to it: "Better be careful. Maybe too hot for you."

Quinlan is summoned to the front door and told by Menzies that Vargas experienced "some trouble," although Vargas believes the acid attack is unrelated to the bombing affair. Quinlan's "intuition" tells him it is associated with the Grandi case, since "Vargas and his Keystone Cops" have recently given the Grandi family problems.

Under an oil derrick in a conversation filled with overlapping dialogue, Vargas challenges Quinlan's intuition a second time, asking him about Susan's accosting in the street by "Uncle Joe" Grandi's gang. Prejudiced, Quinlan clashes with Vargas, insinuating that his charges are blown out of proportion while also criticizing typical "police procedures" in Mexico. When the district attorney characterizes Quinlan as a "born lawyer," Quinlan expresses his angry annoyance at the shortsightedness of attorneys, while Vargas admits that he hates his job ("there are plenty of soldiers who don't like war"):

Quinlan: I'm no lawyer. All a lawyer cares about is the law.
Vargas: Captain, you are a policeman, aren't you?
Quinlan: Hmm, hmm. Aren't you? You don't seem very positive about the job.
Vargas: There are plenty of soldiers who don't like war. It's a dirty job, enforcing the law, but it's what we're supposed to be doing, isn't it?
Quinlan: I don't know about you, when a murderer's loose, I'm supposed to catch him. (He is filmed from below to emphasize the weightyness of his pronouncement.)

Vargas returns to his Mexican honeymoon St. Marks Hotel to rendezvous with his wife. The camera swings upward and from right to left from Vargas at ground level to an open second floor window across from his hotel. A phallic-like spotlight of a flashlight probes and peeps at Susan [a symbol of sexual violence] in her darkened room across the way as she undresses and removes her sweater. After rushing to cover herself with the sweater and turn on the light in the room, she scares a pigeon from the ledge of her hotel window as she leans out and yells: "See any better this way?" When the peeping tom nephew of Grandi's gang continues to pester and annoy her by shining the bright light at her and blinding her, she unscrews and throws the room's only light bulb at the intruder just as her husband enters their pitch-black room - too late to be helpful.

In the early morning hours out on the street, Uncle Joe Grandi dashes after nephew Risto who threw acid at Vargas. He slaps the young thug, forcing him to respect him as the "boss" now that the boy's old man Vic is "in the pen":

Until he gets out, who's running this outfit?...Oh, what a set-up to work with! One brother in jail, two others dead, and nobody left to carry on the business for the bunch of nephews.

Grandi loses his wig or "rug" as they squabble together.

Mike and Susan walk down the stairs to the hotel lobby, as Mike tells her about tensions and dangers in a border zone (and symbolically in their marriage):

This isn't the real Mexico. You know that. All border towns bring out the worst in a country. I can just imagine your mother's face if she could see our honeymoon hotel.

Grandi tells his nephew that he is worried about the fate of his brother in the penitentiary if anything happens to Vargas: "And if Vargas gets hurt, what happens? My brother Vic is just as good as convicted. You leave Vargas to me."

While Susan waits for Mike in the hotel lobby as dawn approaches, she tells one of Grandi's boys through the window: "I don't want any more postcards." She goes outside to be handed a note: "A souvenir with a million kisses, Pancho." The note is attached to the polaroid picture recently taken of her with Pancho in front of the Ritz Hotel. Although she threatens her husband with leaving for the airport and immediately traveling to Mexico City, she decides to "stick close to" her husband, suggesting that she should stay in a safer, more comfortable motel "on the American side of the border." Vargas, who hasn't yet proved himself to her, feels both ethnically and psychologically defensive: "I suppose it would be nice for a man in my place to be able to think he could look after his own wife in his own country."

While adjusting his lopsided "rug" in his car's rear-view mirror, Grandi plans to terrorize and frame Vargas' pretty wife in a sex/drug crime - to force him to withdraw from his brother's case:

We're gonna get him where it really hurts and without laying a hand on him. He's got a reputation. He's got a young bride. He's gonna leave this town wishing he and that wife of his had never been born.

Meanwhile for safety's sake, Susan is taken part way by Vargas to the Mirador Motel in Texas, a place suggested by Quinlan so that she can get some rest. (Mike is unaware that the motel - a dumpy, remote desert motel - is owned by Grandi who is clearly part of the plot against him.) Along the way as Vargas drives her near the "open border" of "1400 miles without a single machine gun in place" between Mexico and the US, she becomes very affectionate with her husband. With her arms around his neck, she sweetly asks: "You don't mind, do you darling, if we just sit here by this terribly historic border of yours maybe for about a month?" A honking police car with flashing lights appears and breaks up their affection. Susan switches cars and is taken the rest of the way by Menzies.

Vargas is taken off with Quinlan to assist in the car bombing case - Menzies realizes that Quinlan has forgotten his cane as his police car speeds away. [His forgetfulness ultimately dooms him.] He explains how his heroic boss came to need a cane for his bad leg - when he stopped a bullet for him:

He got it in a gun fight...He was wounded stopping a bullet that was meant for me.

Meanwhile, Menzies takes Susan to the roadside motel, noticing that they have been followed by Grandi's convertible. [Note: Grandi mistakenly follows because he thinks that Vargas is driving off with Susan.] Menzies stops the tail, forces Grandi to abandon his car, arrests him, and takes him back to town. Susan is dropped off and left alone at the Mirador Motel at "just past seven" in the morning. The isolated and mostly-deserted motel is managed by a skinny, bizarre, sex-crazed, nervous, hyperkinetic, beetle-like, immature night attendant (Dennis Weaver). When the spectacled receptionist first sees her, he is peeping through her motel window. He confronts her in her room, darting, dashing, and jerking around, bringing the sheets to make up the bed. He becomes overly panicky and clings to the wall when she mentions the word "bed": "It's past seven and I haven't been to bed yet." Because there is no "day man" and he is the "night man," he becomes even more squirrelly and jittery when she asks him to help her make the bed. He scurries outside and sticks his head through her open window to speak to her:

Attendant: That, that friend of yours, Mr. Grandi, he, he ain't gonna leave you here for long. (He winks.)
Susan: He is not my friend.
Attendant: He, he brought you here in that, that car, didn't he?
Susan: No, he didn't. As a matter of fact, he's under arrest.
Attendant: Under arrest? Mr. Grandi? (He laughs and then quickly steps away)
Susan: Yes he is.

Vargas and other officers drive to the Linnekar Construction Company site where it is suspected that the dynamite for the car explosion originated. The foreman (Billy House) is asked questions about former young Mexican employee Manolo Sanchez (Victor Millan) and some stolen dynamite, and informs Quinlan: "He's been playin' around with the boss' daughter." The police radio alerts them that Sanchez is already a "suspect now in custody" in Sanchez' own apartment - where the dead man's daughter Marcia Linnekar has been living for four months during an ongoing affair. Quinlan has an intuitive hunch that Manolo Sanchez, now a shoe clerk, is his suspect. Vargas joins Quinlan and a team of police investigators, including Quinlan's faithful but twitchy "pardner" Pete Menzies, at Sanchez' apartment.

There, in a lengthy interrogation scene (with another long single take, often unnoticed) in Sanchez' tiny, cramped, claustrophobic "shoe-box size" apartment (where Marcia has also been living for four months), the nervous young murder-suspect is given the "third degree." Everyone talks at once in the overlapping dialogue. Marcia is permitted to leave (unquestioned) with her expensive lawyer Howard Frantz (William Tannen), after Quinlan speculates that she "had a little quarrel with (her) dad and moved out on (her) own" to live with Sanchez. However, Marcia's boyfriend remains behind to be questioned in the "third-degree" without benefit of counsel.

Quinlan is impatient with the Spanish-speaking suspect - and with Vargas who attempts to translate for him (but is suspected that he may be offering assistance):

Quinlan: I don't speak Mexican...Let's keep it in English, Vargas.
Vargas: That's alright with me. I'm sure he's just as unpleasant in any language.
Sanchez: Unpleasant? Strange? I've been told I have a very winning personality. The very best shoe clerk the store ever had.
Quinlan: You weren't workin' as a shoe clerk out in that construction crew...

Quinlan impulsively slaps Sanchez across the face to intimidate him and quiet him. When Vargas knocks a shoebox onto the floor in the bathroom as he washes up his hands, he notices it is empty. Then, from the living room where the police are questioning Sanchez (he first met Marcia while she was purchasing shoes at the store and has "been at her feet ever since" - and seems to be a "fortune hunter"), a punch to the stomach and a low moan are heard. Vargas tells the D.A.'s investigative assistant Al Schwartz (Mort Mills) that although Sanchez is "unpleasant," "he could even be innocent, you know...Why not? Quinlan doesn't have a monopoly on hunches."

Quinlan wonders how Sanchez can afford such an apartment:

Quinlan: It's quite an apartment, for a shoe clerk. And who pays for it? Marcia?
Sanchez: What if she does?
Quinlan: How long has this been goin' on, huh?

He learns that Sanchez was fired from his last job (at the construction site) working for Linnekar, and believes that Linnekar objected to having a "Mexican shoe clerk for a son-in-law." Quinlan comments on Sanchez' probable motive for murder, but Vargas pushes for more evidence "to put him on the scene of the crime":

Quinlan: Naturally, you had to put him [Linnekar] out of the way...Just because he speaks a little guilty, that don't make him innocent, you know.
Vargas: If you can show motive, yes, but don't you need a bit more than that?
Quinlan: Oh, we'll get it. Oh, there's my coffee. Didn't you bring me any donuts or sweet rolls?
Vargas: You'll have to put him on the scene of the crime.
Quinlan: We will.
Schwartz: You've got to have some evidence.
Quinlan: We'll get it.

While the investigation and interrogation is carried on, Vargas walks across the street to phone his wife at the Mirador Motel to check on her condition. [Note: The uninterrupted shot in Sanchez' apartment breaks for this telephone scene interlude.] Vargas uses the phone of a blind woman shop owner, and curiously turns his back on her so she won't know what he is saying to his wife on the phone. Behind his head on the wall hangs a sign:

If you are mean enough to steal from the blind, help yourself.

During their phone conversation, Susan, a glamorous and seductive woman, is reclining on her motel bed in sexy, silky lingerie. Their call is brief, but he does tell her "how very very much" he loves her. He hangs up on her before they finish talking (the unnverving blind woman eavesdrops and possibly fantasizes about the loving words he whispers to his wife). Once the call ends, Susan calls the front desk asking to not be disturbed since she plans to sleep, and is told that she is the hotel's only guest. She is unaware that the phone in the Manager's Office is answered by Pancho - who ominously assures her: "Nobody's going to get through to you unless I say so."

Soon after his phone call, Vargas returns to Sanchez' apartment, [as another long shot commences], where Manolo sarcastically worries that he is going to be framed for Linnekar's murder: "Sure, I'm the fortune hunter who hypnotized Marcia, who made her kill her father for his money. If I had that kind of power, I wouldn't be where I am today, believe me." He also states how Marcia was the one who was pursuing him and he couldn't resist her: "Well, instead of the man chasing the girl, suppose she was the one. Suppose she asked him to marry her. What should he do? Draw himself up and say, 'No, my dear, you and I could never be happy together because of your money.'" Vargas cautions Manolo about treating the harsh accusations as a "joke."

During their chatting in the living room, Quinlan is in the back room out of sight. He suddenly appears and asks Menzies to search in the bedroom and bathroom, claiming that he is too tired. Shortly later, off-screen in the apartment's bathroom, Menzies is heard proudly announcing his discovery of the evidence linking Sanchez to the bombing - two sticks of dynamite ("I found it!"). Quinlan accuses Menzies of murdering Linnekar so that Marcia (and he) would inherit her father's fortune: ("Poor Rudy Linnekar. He did all he could to keep you away from his daughter. But she stands to inherit a million bucks, so naturally you just moved in here"); Sanchez also admits that the two had been secretly married:

Menzies (to Vargas): Well, Hank has done it again. He's nailed his man.
Quinlan: Thanks to you, pardner.
Menzies: Me? If that dynamite had been a snake there in the bathroom, it would have bit me.
Quinlan (to Vargas): ...This is it, we've broken the case. Rudy Linnekar was, uh, blown up with eight sticks of dynamite and, uh, Sanchez stole ten. That leaves two and we've found 'em both. You heard that boy. We found the dynamite.
Sanchez: That's impossible.
Quinlan: We found two sticks.
Sanchez: ...Where did you find this?
Quinlan: Right here in your love nest.
Sanchez: Where?
Menzies: Where you had it stashed, of course.
Sanchez: What are you trying to do?
Quinlan: We're trying to strap you to the electric chair, boy.
Menzies: We don't like it when innocent people are blown to jelly in our town.

Quinlan tells Sanchez that he must pay for his awful crime:

Quinlan: There's an old lady on Main Street last night picked up a shoe. The shoe had a foot in it. We're going to make you pay for that mess.
Sanchez: (He pleads in Spanish with Vargas.)
Vargas: You'll have to stop him yourself...
Quinlan (overlapping their lines): He can talk Hindu for all I care.

Sanchez is taken away to be booked at the station. Vargas is shown that the incriminating evidence was found in a shoebox in the bathroom. Astonished, he immediately realizes that the boy has been framed and that Quinlan has planted the evidence to conclusively implicate his suspect in the murders. When he tells Quinlan the shoebox was empty ten minutes earlier, Quinlan interprets his story: "You people are touchy. It's only human you want to come to the defense of your fellow countryman." Vargas, a man of integrity and truth, threatens to expose Quinlan to authorities - determined to clear the innocent man and expose the detective's corrupt methods:

You framed that boy. FRAMED him!

Rattled, Quinlan raises his cane between them to strike Vargas, but he holds back. Vargas drives off with Schwartz to plot Quinlan's downfall. Quinlan fears the consequences of their challenge: "Listen, I got a position in this town, a reputation...somebody's gonna be ruined."

Quinlan temporarily befriends Grandi, now that they both have similar intentions to corral Vargas. Grandi tells Quinlan:

We are both after the same exact thing, Captain. If Vargas goes on like this, shooting his face off...Somebody's reputation has got to be ruined. Why shouldn't it be Vargas's?

Arm in arm, Grandi leads Quinlan away to discuss how they will intimidate and embarrass Vargas - to force him to drop his case against Quinlan. As a church bell tolls, Grandi suggests going "somewhere nice and private, huh, where we can sit down and have a drink." Quinlan retorts: "I don't drink," as an abandoned Menzies stares at them from a window as they walk away, their figures reflected in the window glass. The scene dissolves into another window reflection of hot-rod cars arriving at the Mirador Motel.