During another excursion to the Long Island beach house, Mozart's Jupiter Symphony plays on the soundtrack. In a bedroom scene, Annie sifts through her college course catalogue and considers taking Modern American Poetry or Introduction to the Novel. Alvy advises: "Just don't take any course where they make you read Beowulf." As Alvy begins to prepare to make love, he suggests: "We should just turn out the lights, you know, and play hide the salam." Another issue causes resentment - Alvy complains that Annie is sexually idiosyncratic - she always needs to smoke pot each time before they have sex. She counters with a mention of his years-long Freudian psychoanalysis:

Alvy: Yeah, grass, right? The illusion that it will make a white woman more like Billie Holiday.
Annie: Well, have you ever made love high?
Alvy: Me? No. I - I, you know, If I have grass or alcohol or anything, I get unbearably wonderful. I get too, too wonderful for words. I don't know why you have to get high every time we make love.
Annie: It relaxes me.
Alvy: You have to be artificially relaxed before we can go to bed?
Annie: Well, what's the difference anyway?
Alvy: Well, I'll give you a shot of sodium pentothal. You can sleep through it.
Annie: Oh come on. Look who's talking. You've been seeing a psychiatrist for 15 years. You should smoke some of this. You'd be off the couch in no time.

To stimulate himself, Alvy produces "an erotic artifact" - a red lightbulb that he's brought out from the city to create "a little old New Orleans essence." Without grass, while they go through the motions of making love, in a clever use of double-exposed film, Annie's bored and detached spirit leaves her body's position on the bed during intercourse and sits on a nearby chair to watch her conversation with him. He talks to her alter ego and makes love to Annie at the same time. He is frustrated, because he cannot entirely possess her ("I want the whole thing"):

Alvy: Hey, is something wrong?
Annie: No, why?
Alvy: I don't know. It's like you're removed. (She rises from herself on the bed)
Annie: No, I'm fine.
Alvy: Are you with me?
Annie: Uh, huh.
Alvy: I don't know. You seem sort of distant.
Annie: Let's just do it, all right?
Alvy: Is it my imagination, or are you just going through the motions?
Ghost Annie: Alvy, do you remember where I put my drawing pad? Because while you two are doing that, I think I'm going to do some drawing.
Alvy (gesturing at the Ghost version of Annie): You see, that's what I call removed.
Annie: No you have my body.
Alvy: Yeah, but I want the whole thing.
Annie: Well, I need grass.
Alvy: Well, it ruins it for me if you have grass. Because you know, I'm like a comedian. So if I get a laugh from a person who's high, it doesn't count, you know, 'cause they're always laughing.
Annie: Were you always funny?
Alvy: Hey, what is this - an interview? We're supposed to be making love.

The last few lines of the preceding scene suggest the next scene in which a cigar-chomping agent (Bernie Styles) recommends Alvy to write comic material for a "pathetic" comedian (Johnny Haymer). In a voice-over aside, Alvy comments on the ridiculous on-screen action:

Jesus. This guy's pathetic. Look at him mincing around. Thinks he's real cute. You want to throw up. If only I had the nerve to do my own jokes. I don't know how much longer I can keep this smile frozen on my face. I'm in the wrong business, I know it.

Alvy delivers his own brilliant, comedic monologue in a stand-up comedy act performed in front of a large University of Wisconsin student audience (Annie's alma mater), on how he flunked out his freshman year for cheating on his metaphysics exam:

I was thrown out of NYU my freshman year for cheating on my metaphysics final, you know. I looked within the soul of the boy sitting next to me. When I was thrown out, my mother, who was an emotionally high-strung woman, locked herself in the bathroom and took an overdose of Mah-Jong tiles. I was depressed at that time. I was in analysis. I was suicidal as a matter of fact and would have killed myself, but I was in analysis with a strict Freudian, and, if you kill yourself, they make you pay for the sessions you miss.

Backstage after his triumphant performance, Annie enthusiastically praises him as he signs autographs, telling him how she is intelligently catching on to his allusion-filled jokes: "I think I'm starting to get more of the references, too."

The next day in the film's pivotal scene that comments upon the wide, alienating divide between their two incompatible families, he will have the opportunity to meet her WASP-ish Protestant family at Easter sharing a traditional ham dinner, a meal which he should be avoiding as a traditional Jew. At the table, he is so paranoid about her parents that he has a flash transformation, imagining that Grammy Hall sees him as a bearded orthodox Hasidic rabbi - with a reddish beard, a black hat and coat. Alvy tells Mom Hall (Colleen Dewhurst) about the results of his fifteen years of analysis: "I'm making excellent progress. Pretty soon, when I lie down on his couch, I won't have to wear the lobster bib." Nobody laughs at Alvy's joke. It is clear that Annie's mother, father and bigoted ("Jew hater") Grammy Hall don't approve of him.

In an aside to the camera, Alvy describes the lack of substance in the family's lifestyle and dinner conversation: "I can't believe this family. Annie's mother is really beautiful, and they're talking swap meets and boat basins." He labels Grammy Hall as a "classic Jew hater." Alvy feels radically alienated from the Hall family: "They really look American, you know, very healthy, like they never get sick or anything. Nothing like my family. You know, the two are like oil and water."

In a split-screen to illustrate the two diverse worlds, Alvy's New York Jewish family is compared in a similar dinner scene to Annie's family. On the left third of the screen is the brightly lit, affluent, politely gracious, aloof and sober Hall family discussing subjects such as the Christmas play and the 4-H Club. On the right two-thirds of the screen is a darkly lit, sloppy and informal, noisily argumentative, competitively babbling, neurotic Singer family talking about illness (diabetes, heart disease) and unemployment. [Alvy's argumentative nature and fear of marriage were inherited from his family.] The two families actually converse across the divided split-screen:

Mrs. Hall: How do you plan to spend the holidays, Mrs. Singer?
Mrs. Singer: We fast.
Mr. Hall: Fast?
Mr. Singer: No food. You know, to atone for our sins.
Mrs. Hall: What sins? I don't understand.
Mr. Singer: To tell you the truth, neither do we.

Sitting in his darkened room in a short, macabre scene, Annie's weird brother Duane (Christopher Walken) tells Alvy that he has fantasies of someday crashing his car into oncoming traffic:

I can anticipate the explosion, the sound of shattering glass. The flames rising out of the flowing gasoline.

Alvy excuses himself to escape from Duane's company:

Right, well I have to go now, Duane, because I'm due back on the planet Earth.

Duane's nightmare vision turns real when Alvy and Annie are driven by Duane through the night rain to the airport - Alvy is fearful of Duane's vision coming true while Annie is totally unconcerned. Their ride metaphorically foreshadows the crashing future of their relationship.

Annie's newly-acquired independence, progress, improvement and life-style, and the preceding disastrous Easter Sunday encounter, cause Alvy's paranoia to surface again. As they walk along the streets in New York, the camera tracks their movement. In a big argument, she accuses him of "spying" on her and shying away from commitment, because he considers her not "smart enough." Rather than directing his mockeries toward her as entertainment, his tone becomes one of criticism. He counter-accuses her of being unfaithful, having an affair with her college professor, and taking pretentious courses - and he criticizes her Chippewa Falls upbringing:

Alvy: Well, I didn't start out spying. I thought I'd surprise you. Pick you up after school.
Annie: Yeah, but you wanted to keep the relationship flexible. Remember, it's your phrase.
Alvy: Oh stop it, you're having an affair with your college professor, that jerk that teaches that incredible crap course, Contemporary Crisis in Western Man...
Annie: Existential Motifs in Russian Literature. You're really close.
Alvy: What's the difference? It's all mental masturbation.
Annie (counter-accusing him): Oh, well, now we're finally getting to a subject you know something about.
Alvy (defending his lonely sin): Hey, don't knock masturbation. It's sex with someone I love.
Annie: We're not having an affair. He's married. He just happens to think I'm neat.
Alvy: Neat! What are you, 12 years old? That's one of your Chippewa Falls expressions.
Annie: Who cares? Who cares?
Alvy: Next thing, you know, he'll find you keen and peachy, you know. Next thing, you know, he's got his hand on your ass.
Annie: You've always had hostility towards David, ever since I mentioned him.
Alvy: Dave? You call your teacher David?
Annie: It's his name.
Alvy: It's a Biblical name, right? What does he call you, Bathsheba?
Annie: Alvy, Alvy, you're the one who never wanted to make a real commitment. You don't think I'm smart enough. We had that argument just last month, or don't you remember that day?

The next scene is a flashback to a month earlier in their apartment in which Annie unpacks groceries and "unloads" more concerns. Annie tells Alvy about her conversation with her analyst, highlighting the areas in their relationship which will eventually separate them - his possessiveness, conservatism, and jealousy. To his dismay, he also resents how she has made more progress with her therapist in one session (and one hour) than he has made in his fifteen years of therapy. Annie reports on her dream of suffocation [fear of commitment] and the breaking of the glasses [a disguised castration symbol?] of an Alvy surrogate - Frank Sinatra:

Annie: So I told her about, about the family and about my feelings towards men and about my relationship with my brother. And then she mentioned penis envy. Do you know about that?
Alvy: Me? I'm, I'm one of the few males who suffers from that...
Annie: She said that I was very guilty about my impulses towards marriage and children. And then I remember when I was a kid how I accidently saw my parents making love.
Alvy: Really. All this happened in the first hour? That's amazing. I'm off fifteen years. You know, I have nothing like that.
Annie: I told her my dream and then I cried.
Alvy: Cried? I have never once cried. That's fantastic to me. I whine. I sit and I whine.
Annie: Wait a minute Alvy. In my dream, Frank Sinatra is holding his pillow across my face and I can't breathe...strangling me...
Alvy: No kidding. Oh sure! Because he's a singer and you're a singer. You know, so it's perfect. So you're trying to suffocate yourself. It makes perfect sense. It's a perfect analytic kind of insight.
Annie: She said your name was Alvy Singer.
Alvy: What do you mean? Me?
Annie: Yeah, yeah you. Because in the dream, I break Sinatra's glasses.
Alvy: Sinatra had glasses? You never said Sinatra had glasses. So what are you saying? That I'm suffocating you?...
Annie: Oh and God, Alvy, I did this really terrible thing to him. Because then when he sang, it was in this real high-pitched voice.
Alvy: What did the doctor say?
Annie: Well, she said that I should probably come five times a week. And you know something? I don't think I mind analysis at all. The only question is, is 'Will it change my wife?'
Alvy: Will it change your wife?
Annie: Will it change my life?
Alvy: Yeah, but you said, 'Will it change my wife?'
Annie: No I didn't. I said, 'Will it change my life, Alvy?'

Alvy turns to the camera and asks the audience to confirm that Annie said 'wife': "She said, 'Will it change my wife?' You heard that, because you were there. So I'm not crazy."

Annie: And then I told her about how I didn't think you'd ever take me really seriously because you don't think that I'm smart enough.
Alvy: Why do you always bring that up? Because I encourage you to take adult education courses? I think it's a wonderful thing. You meet wonderful interesting professors.

In a complete reversal (in a return to the present a month later) in a contrasting transition, Alvy expresses his disdain for adult education, and denounces the professors and their courses. With all of his encouragement to take adult education courses in subject areas of his interest and to improve her mind, Annie has begun to drift away - he is jealous of her friendship with one of the professors - (Alvy is presumably scared of being usurped in the Pygmalion-like relationship he has with Annie):

Alvy: Adult education is such junk. The professors are so phony. How can you do it?
Annie (defensive): I don't care what you say about David. He's a perfectly fine teacher. And what are you doing following me around for anyway? I think we'd better call this relationship quits.

Alvy questions the arbitrariness of the universe, and can't imagine how things have changed so quickly in their relationship. He begins to feel excluded after encouraging her to expand her horizons: "Well, I don't know what I did wrong. I mean, I can't believe this. Somewhere, she cooled off to me. Is it something that I did?" A passer-by tells him to face reality and realize how we cannot control what happens to us - either the death of relationships and romantic love, or death itself. The stranger's advice underscores the reason for the unhappiness that has grown up in his relationship with Annie:

It's never something you do. That's how people are. Love fades.

Alvy is depressed by the thought. He speaks to strangers on the street to find the secrets to their happiness for sexual and romantic compatibility:

Alvy: With your wife in bed, does she need some kind of artificial stimulation, like, like marijuana?
Older Man: We use a large vibrating egg.

Alvy: You look like a very happy couple...How do you account for it?
Young Woman: I'm very shallow and empty and I have no ideas and nothing interesting to say.
Boyfriend: And I'm exactly the same way.

He crosses into the open street, and pats the nose of a police patrol horse. In voice-over, Alvy explains how he believes his problems with women started early in life, recalling:

You know, even as a kid, I always went for the wrong women. I think that's my problem. When my mother took me to see Snow White, everyone fell in love with Snow White. I immediately fell for the Wicked Queen.

In the next short scene, Annie and Alvy suddenly become animated cartoon characters as they continue their argument, in a Disney-like castle setting reminiscent of Snow White and the Seven Dwarfs. [The cartoon was based upon Stuart Hample's newspaper comic strip "Inside Woody Allen" which ran from 1976-1984.] In a perverse attraction, Annie is portrayed as 'the wicked queen' he preferred over Snow White in the film. Alvy (called Max again by Rob) appears, short, childish, and infantile:

Annie: We never have any fun any more.
Alvy: How can you say that?
Annie: Why not? You're always leaning on me to improve yourself.
Alvy: You're just upset. You must be getting your period.
Annie: I don't get a period. I'm a cartoon character. Can't I be upset once in a while?
Rob: Max, will you forget about Annie? I know lots of women you can date.
Alvy: I don't want to go out with any other women.
Rob: Max, I have got a girl for you. You are going to love her. She's a reporter for Rolling Stone.