Synopsis This volume of the Astadhyayi of Panini contains English translation of adhyayas two and three. It includes Sanskrit text of individual sutras with their transliteration, word-boundaries, indication of inflectional endings and formation of compounds. Each sutra is also furnished with anuvrtti, vrtti, examples, detailed explanatory notes, and complete derivational history of examples cited by the Kasikavrtti. Explanatory notes are presented to facilitate proper understanding of individual sutras, especially in view of their formulation, interpretation, application and relative placement. An attempt has been made to sort out and explain pertinent issues, as raised and discussed by major commentaries. The appendix contains over 1000 examples with complete derivational history and discussions relevant to the Paninian grammatical system. This volume is the third of a planned five-volume study. The fourth and fifth volumes of this series will cover the sutras of adhyayas four-five, and six-seven-eight, respectively.