Ned spends his time playing circus with Jonah instead of doing chores, angering Dr. Gordon. Ned decides to run away when Alf and Wilt, two circus journeymen, ride through but they con him out of Jonah. Ned and the doctor need Black Beauty's help to get the pony back.
Albert takes Black Beauty for a run against Dr. Gordon's wishes and he forbids Kevin and Albert from riding the horse without permission. The boys have a falling out and Albert heads to the Grainger farm where he presents himself as an experienced trainer. He is tested when he gets on a dangerous stallion.
T. Otis Waygood and Dolly arrive in the village and Dolly, over Jenny's objections, borrows Beauty for a fast gallop. The squire is intrigued and sets up a match race between Jenny and Dolly. Ned recognizes the shady Waygood from his days in London and wonders what he's up to.
Paperwork is discovered revealing Black Beauty doesn't belong to the Gordons. The lawyer Crevache refuses to listen to reason so Jenny takes off with Beauty to keep him from being taken. In the end Black Beauty will decide who he should be with.
There are new inhabitants in the Eglinton manor with Kevin and Albert coming upon a young Cecily running away from her uncle. Joshua Eglinton claims to Dr. Gordon his niece has a nervous disposition and needs to be kept alone, but Kevin disobeys his father to rescue her. Albert dresses as Cecily allowing Kevin and Black Beauty time to save the young lady from her relative's nefarious intentions.
Ned is spending time with George downing trees while Jenny is excited about a party invite from Frances Bazely. Dr. Gordon asks Ned to escort Jenny but right before George is hurt by a fallen tree. Ned needs help from Beauty and Jenny to help his injured friend.
Kevin and Albert enjoy listening to the tales of Corporal Donovan, who claims to have been in the Light Brigade but Albert has his doubts. When men claiming to be the squire's employees evict Donovan, the boys come to his aid and with Beauty's help uncover stolen goods.
Dr. Gordon and Amy head to the city, leaving the youngsters on their own and arguing about who will ride Black Beauty. Albert sneaks off with Beauty to a carnival and loses the horse to shyster Teapot over a shill game debt. Kevin, Jenny, Ned, and Beauty must aid Albert in dealing with his blunder.
Mr. Coomb's dog is injured in one of the squire's traps and the older man doesn't know how he will watch his sheep. Dr. Gordon volunteers Kevin and Albert, who do their best but the sheep start mysteriously disappearing. Albert uncovers a rustling operation but needs Beauty's help to prove it.