In early Victorian times, young Philip Ashley lives an idyllic life on a grand estate in rural Cornwall owned by his beloved guardian and cousin, Ambrose. When he receives word that Ambrose has suddenly married a distant cousin in Italy, and is now gravely ill, he travels to Italy; only to find his cousin is mysteriously dead and his new wife is missing.
After Cousin Rachel's unexpected visit to the Ashley estate, Philip's initial hostility starts to fade, and he becomes increasingly fond of her. He grants her a generous allowance from the estate and urges her to stay permanently.
As Rachel settles into life at the Ashley estate, she spends lavishly on refurbishments and plans a costly water garden in a steep gorge. Meanwhile, Philip discovers another letter from Ambrose revealing a second, unsigned will, leaving the whole estate to Rachel - but which also accuses Rachel of poisoning him. Admitting that he loves Rachel, Philip dismisses the poison charge as the ravings of a dying man and makes plans to transfer ownership of the estate to Rachel, believing it is what Ambrose would have wanted.
After transferring the ownership of the Ashley estate to Rachel, Philip becomes deathly ill and is unconscious for a week. When he wakes up, he finds that Rachel is spending a lot of time with her Italian friend Signore Rainaldi. He also finds that much progress has been made in building the water garden, including a bridge across the steep gorge. A workman warns Philip that the bridge isn't safe for traffic yet, but Rachel doesn't get the message.