Alice comes upon a mushroom and sitting on it is a blue Caterpillar smoking a hookah. The Caterpillar questions Alice and she admits to her current identity crisis, compounded by her inability to remember a poem.
Before crawling away, the caterpillar tells Alice that one side of the mushroom will make her taller and the other side will make her shorter. She breaks off two pieces from the mushroom. One side makes her shrink smaller than ever, while another causes her neck to grow high into the trees.
The Cheshire Cat appears in a tree, directing her to the March Hare's house. He disappears but his grin remains behind to float on its own in the air prompting Alice to remark that she has often seen a cat without a grin but never a grin without a cat.