A telephone's ring interrupts their kissing mood and brings both of them back to reality. His conversation with Buljanoff identifies him as the Grand Dutchess' representative [her adviser and kept lover], and he is told the name of the special envoy: "Yakushova." Suddenly, it dawns on him that "Yakushova" and "Ninotchka" are the same person after she helps him to spell her complicated Russian name on a piece of paper.

After finding out her identity - and that he is the enemy of her mission in Paris, she forces herself to leave his apartment after discrediting their kissing and love-making. She tells him that as adversaries, their relationship must be over:

Ninotchka: I must go. (She puts on her coat and hat)
Leon: Or should I say Special Envoy Yakushova?
Ninotchka: Let's forget we ever met.
Leon: No, no, no, I have a much better suggestion. Let's forget the telephone ever rang. I never heard that you're Yakushova. You're Ninotchka. My Ninotchka. (He holds her by the elbows)
Ninotchka: I was sent here by my country to fight you.
Leon: (He attempts to stop her at the doorway) All right, fight me. Fight me as much as you want, only fight me tomorrow morning. There's nothing sweeter than sharing a secret with an enemy.
Ninotchka (uncompromisingly): You represent white Russia and I represent Red Russia.
Leon: No, tonight, let's not represent anybody but ourselves.
Ninotchka: It's out of the question. If you wish to approach me...
Leon: You know I want to.
Ninotchka: Then do it through my lawyer. (She opens the outer doors)
Leon: But Ninotchka, you can't walk out like this. I'm crazy about you. I thought I'd made an impression on you. You liked the white of my eye.
Ninotchka: I must go.
Leon: Oh no, Ninotchka. I held you in my arms. You kissed me!
Ninotchka: (She lowers her eyes) I kissed the Polish lancer too, before he died.

In the next scene, in Swana's apartment where she speaks on the phone, it has been three days since "some horrid female envoy arrived from Moscow." In the living room of the Royal Suite, Ninotchka confers with two lawyers next to piles of books and papers, mechanically reciting her knowledge of paragraph 59b, section 25f of the Civil Code, page 824, a case law provision dealing with the property of foreigners residing in France. As she emerges from the elevator on the lobby level of the hotel to go to a restaurant, she again views the hat in the millinery shop showcase, and silently shakes her head.

Outside the hotel, she leans in a taxi cab window and asks the driver for a recommendation on where to eat. The driver suggests a place he eats - Pere Mathieu's, "just a place for workmen" located "down eight blocks, the Rue de Poivrel." The astounded driver looks after her as she begins walking there. As she proceeds down the street, she passes by Leon's car - he notices the direction she is taking.

In the lovely scene in the cafe set a few steps below the level of the sidewalk, French workmen enjoy their lunch as Ninotchka enters. She is led to a booth by the window by the restaurateur Pere Mathieu (Charles Judels). At the solitary table, Ninotchka promptly orders:

Ninotchka: Raw beets and carrots.
Mathieu: (pleasantly) Madame, this is a restaurant, not a meadow.

The cafe owner hands her a menu to tempt her appetite. Leon enters the restaurant and casually makes his way by her table, deliberately pretending not to see her, but then feigning surprise when he notices her: "Well, for goodness sake, hello! It certainly is a small world, isn't it!" He sits at a table directly opposite from her.

When Ninotchka orders her lunch, she states her spartan tastes:

Ninotchka: Bring me something simple. I never think about food.
Mathieu: (horrified) Madame, if you don't think about food, what do you think about?
Ninotchka: The future of the common people.
Mathieu: That's also a question of food.

Leon mockingly acts humbly toward Ninotchka:

You insulted him, you know that? You hurt his feelings. It was just like telling a musician that you don't like music. Why that good old man believes in food just as you believe in Karl Marx. You can't go around hurting people like that, Comrade Yakushova. (He moves a chair closer to Ninotchka.) But you can make it up to him. Do you know how? By eating everything that he brings you with relish, by drinking everything with gusto, by having a good time for the first time in your natural life!

To assure her that he is comfortable around the laboring class, Leon explains how he always eats in the working quarter where he is "most at home among working men. I hate those places where you circulate - the Clarence Hotel and those places. This is my natural element." Then, he waves to other truckmen and workers in the restaurant to prove his affinity and friendliness to them, although the cafe owner calls him a "new customer," confirming Ninotchka's suspicions.

He refuses to give up on her and continues to attempt to win her over with his affable charm. He moves completely over to her table, and tries to make her less grim:

Leon: When we first went to my apartment, did I have the slightest idea that you were connected with this deal?
Ninotchka: You know now. And I know now that you are a man who employs business methods which in Russia would be punished by death.
Leon: Ohhh, death, death! Always so glum! What about life, Ninotchka? Do Russians never think about life? Of the moment in which we are living? The only moment we ever really have? Oh, Ninotchka, don't take things so seriously. Nothing is worth it, really. Please...relax...I beg you, Sergeant, smile!
Ninotchka: What?
Leon: Will you smile?
Ninotchka: Why?
Leon: Well, just smile.
Ninotchka: At what?
Leon: At anything. At the whole ridiculous spectacle of life. At people being so serious, taking themselves pompously, exaggerating their own importance. If you can't think of anything else to laugh at, you can laugh at you and me.
Ninotchka: Why?
Leon: Because we are an odd couple.
Ninotchka: Then you should go back to your table.
Leon: No. No, I can't leave you. I won't. Not yet. Not until I've made you laugh...at least once.

To melt her icy, stony-faced, humorless, impassive exterior and have her "laugh from the heart," he tells her dumb jokes, beginning with a funny story. But her logical, methodical questioning of the facts of his first joke throws him off. Leon's second and third attempted jokes, a Scotch story about two Scotchmen who met on a street and a silly joke about the moon fail to produce any response. Accusing her of being unfunny, glum, and having no sense of humor: "Maybe the trouble isn't with the joke, maybe it's with you," he gives her "one more chance." He raises his voice threateningly to deliver his final joke:

When I first heard this joke, I laughed myself sick! Here goes. A man comes into a restaurant. He sits down at the table and he says, 'Waiter, bring me a cup of coffee without cream.' Five minutes later, the waiter comes back and says, 'I'm sorry, sir, we have no cream. Can it be without milk?'

All the workmen in the cafe burst into laughter, but Ninotchka doesn't laugh. Leon is furious, and tells her the joke again to make sure she gets it, but becomes all mixed up in the retelling. He is exasperated with her: "Oh you have no sense of humor! None whatsoever. Not a grain of humor in you. There's not a laugh in you. Everybody laughs at it but not you!" And then he leans backward on the shaky table behind him and accidentally topples over in his chair, causing everything to crash to the floor. He finally succeeds in making her laugh uproariously and uncontrollably. She howls, throws her head back, and collapses across the table, pounding it with her hand. His embarrassed reaction while lying sprawled on the floor is one of indignation: "What's so funny about this?" He slowly gets up from the floor, recomposes himself, and sits next to her. And then he recovers and breaks down into howling laughter with her. He sees the humor of the situation and joins in everyone's laughter at his own expense. He has successfully cracked through her determined facade of Russian reserve.

In the next scene in the living room of the Royal Suite, Ninotchka is seen in a conference with her two lawyers and the three Russians. She suddenly laughs unexplainedly, totally out of character, transformed by her experience of the previous day. The hearing on the injunction is set for two weeks later, and the Russians realize that they must helplessly remain in Paris until that time. Warming up to the idea of enjoying herself (without visiting all the public utilities), she gives her comrades money to go out and enjoy Paris: "Here are fifty francs...Bring me back forty-five."

After they have left - a bit disappointed, Ninotchka locks both outer doors of the Royal Suite behind them. She goes to a locked, lower bureau drawer - she kneels and takes from it the very hat which she had twice disapproved of in the showcase window of the hotel lobby. She holds it up, stares at it, moves over to the large, full-length mirror in her bedroom and firmly places the frivolous, cone-shaped hat on her head with both hands. After a long, almost hopeless look at herself in the mirror, she sits down, looks uncertainly at herself, leans forward and gazes at the image of a new person, and then rests her chin on her hand. Ninotchka is beginning to lose interest in the Duchess' jewels - ready to exchange her stark, military-style clothes, and gradually accept the latest Parisian fashions.

The scene dissolves to Leon's apartment, an evening scene, in which Gaston views with alarm the "distinct change" in Leon after meeting "that Bolshevik lady." When the doorbell rings, Leon stops Gaston from going to open the door, repeating Ninotchka's words to him: "Go to bed, little father, go to bed." When Leon answers the door, Ninotchka timidly enters, wearing her new hat and a new dress - a complete outfit that she shyly models. Leon gazes at her splendid new clothes for a few moments, takes her hand, kisses it, and then leads her into the living room:

Ninotchka: I don't look too foolish?
Leon: Foolish? If this dress were walking down the boulevard all by itself, I would follow it from one end of Paris to the other, and when I caught up with it, I would say, 'Wait a moment, you charming little dress. I want you to meet Ninotchka...you two were meant for each other.'

Although she remembers his apartment, the experience is a novel one for her as a new, relaxed, and blossoming woman, changed in appearance and personality. She radiantly warms up to him and expresses her tender mood after giving herself up to the pleasures of love with him. The clock chimes nine o'clock. Overwhelmed by his own love for her, Leon attempts to declare his love for her and stammers. She also attempts to tell him that she loves him, although she cannot quite bring herself to say the words:

Leon: ...I have things to tell you about which I can't shout. Darling...I...oh... (He takes her in his arms and kisses her.) You see, I couldn't shout that.
Ninotchka: Oh Leon, Leon, you know the jokes you told me a few days ago? I wake up in the middle of the night and laugh at them. You know that's wrong. They aren't funny, they're silly, they're stupid. And still, I laugh at them...and when I look at Buljanoff and Iranoff and Kopalski I know they are scoundrels and I should hate them - then I realize who made them like that, and instead of sending my report to Moscow I go down and buy a ridiculous hat, and if this keeps on - am I too talkative?
Leon: No, no...go on.
Ninotchka: Leon, I want to tell you something which I thought I would never say, which I thought nobody ever should say, because I didn't think it existed...and, Leon...I can't say it...(They kiss again and then embrace. Afterwards, she takes a little mirror and lipstick from her handbag and guiltily makes up her lips.)
Leon: What a gesture for a Sergeant.

Leon shows her the silver-framed photograph of the Grand Duchess Swana that he has put away in a desk drawer. Sadly jealous and making comparisons, Ninotchka makes a request:

Oh Leon, don't ever ask me for a picture of myself. I couldn't bear the thought of being shut up in a drawer. I couldn't breathe, I couldn't stand it.

Leon takes her in his arms to reassure her - they are deliriously in love.

The Duchess Swana and five other smartly-dressed Parisians have already seated themselves in a fashionable night club, eagerly anticipating the spectacle of Leon with "that female Bolshevik." Swana expects to triumph over the Russian: "Now, we must be very discreet. If she sucks her soup and drinks out of her finger bowl, I don't want anyone to laugh. We must not embarrass poor little Leon. He has gone through enough for my sake. We mustn't add insult to injury." When Leon enters with a radiantly-dressed Ninotchka in a beautiful evening gown, Swana's expression freezes.

After they are seated at their own table, Leon decides to order dry champagne as an inexperienced Ninotchka is about to take her first sip:

Ninotchka: The closest I ever came to champagne was in a newsreel. The wife of some president was throwing it at a battleship.
Leon: It's always good luck to launch something with champagne; a battleship...or an evening.
Ninotchka: It's funny to look back. I was brought up on goat's milk. I had a ration of vodka in the army, and now champagne.
Leon: From goats to grapes. That's drinking in the right direction.
Ninotchka: (After her first taste, her face grimaces but then breaks into a smile.) It's good. (She drinks the whole glass down at once.) From what I read I thought champagne was a strong drink. It's delicate. Does anyone ever get drunk on this?
Leon: Well, there have been cases...but the headache the next morning is worth while - if you drink it with the right toast. (They toast, raising their glasses.) To us, Ninotchka!

The Grand Duchess stops by their table and introduces herself, inviting herself to sit down with them for a few moments. With an acerbic, sharp-edged wit and a desire to embarrass him, she discusses her dog Punchy and his recent triumph at a dog show:

Swana (to Ninotchka) You see, Count d'Algout gave me Punchy for my birthday. (To Leon) You must have searched for weeks before you found anything as divine as Punchy, didn't you Leon?
Leon: Months, Swana.
Swana (to Ninotchka): Oh poor Madame Yakushova...here we are talking in mysteries...I'm sure you wonder what it's all about.
Ninotchka (dryly and directly): Not at all...I understand perfectly. Count d'Algout gave you a dog. You made it very clear, Madame.
Swana: Oh dear me...I must be losing my finesse. If I'm not careful, I'll be understood by everybody.
Leon (uncomfortably): There's a charming crowd here tonight, isn't there?

Swana persists, cynically criticizing Ninotchka's evening attire, but Ninotchka will not back down, fencing back with the Duchess:

Swana: Is that what they're wearing in Moscow this year?
Ninotchka: No, last year, madame.
Swana: Isn't it amazing? One gets the wrong impression of the new Russia. It must be charming. I'm delighted conditions have improved so. I assume this is what the factory workers wear at their dances.
Ninotchka: Exactly. You see, it would have been very embarrassing for people of my sort to wear low-cut gowns in the old Russia. The lashes of the Cossacks across our backs were not very becoming, and you know how vain women are.
Swana: Yes, you're quite right about the Cossacks. We made a great mistake when we let them use their whips. They had such reliable guns.

Concerned about losing her male lover, and trying to rub her bitchiness in even further, Swana mentions the lawsuit against the Russian:

The only thing we have in common is our lawsuit and that will be settled next week. I understand everything will be over by Thursday. Am I right?...It's too bad you have so few more days here in Paris. (To Leon) Now Leon, be sure and redouble your efforts so that Madame can take some pleasant memories when she returns to Moscow.