When Montreal industrialist Blair Stanley is indicted for embezzlement, he sends his 10-year-old daughter Sara to the small town of Avonlea on Prince Edward Island, where she lives with her two aunts, Hetty and Olivia King.
Sara and the children of Avonlea public school try to raise money for new books for the school's library. After a traveling swindler runs off with the proceeds, its up to the children to come up with the funds again. Jasper Dale, the town recluse who is painfully shy, comes to the rescue; Sara gets the donation of a lifetime.
Circumstances throw Rachel Lynde, the most disagreeable woman in Avonlea, and Alexander Abraham, the most disagreeable man in Avonlea, along with Sara and Felix, in close quarters while waiting out a Small Pox outbreak. Everyone learns not to take things on face value, and Sara shows everyone about making friends.
Fans of 'Anne of Green Gables' will remember Marilla getting on Anne's case for her wild imagination. Now the shoe is on Mirilla's foot - during a gossip section at the town's Sewing Circle where Sara is trying to learn simple stitches despite the less than helpful remarks from Hettie and Felicity. Marilla makes up a tale which ends up coming true, to her chagrin, for now the gossips will have much more to say about the tarnish on her honest reputation.
The cousins are walking through the woods when Felix throws a rock through the window of the Old Lloyd house. This causes old woman Lloyd to spring out of the door and the cousins to run away, but Sara falls and is caught, brought into the house she learns bits and pieces about the old woman. Sylvia Gray comes to visit her old friend Olivia, and while walking through the woods old woman Lloyd hears her name and sees something in Sylvia's face that reminds her of something of her past ... but what? And what is up with her brother sneaking into old lady Lloyd's house?
While Alec and Janet are away, Felicity is in charge of the house. Sara stays with them while Hetty is in Charlottetown settling a water rights dispute with the owners of a neighboring farm.
Instead of taking care of a husband, Janet's spinster sister, Abigail Ward, has funneled her energies into being a meticulous homemaker despite not really enjoying it. Things may change when into her life returns Malcolm McEwan, an old beau who has been away from Avonlea for seven years. He has returned to make good on a promise: Abigail's father would not allow the two to marry until Malcolm made a fortune, which he has now done in Yukon gold. He now wants to marry Abby as he calls her. Abby is in a quandary. She likes having the attention of a man, but realizes that...
A former student teacher of Hettie's and her husband die leaving no will, but plenty of property and a small baby. Hettie and Rachael Lynde battle over who will care for the child, but Sara and Felicity have a better idea they have found the perfect couple to be the child's parents. However the law has other ideas.
When two residents of Avonlea attend church the town starts a muttering. Peter who is Methodist and Peg Bowen who is known as the Witch of Avonlea. The theme of intolerance and teasing is visited, and how people are not always what they seem. When influenza takes a hold on two children, its outcast Peg who comes to the rescue.
An upcoming spelling bee shows that there is more than one definition for the word "witch" ... and that Peg Bowen isn't as much of a witch as some of Avonlea's prominent citizens - Hetty and Janet King.
Judson Parker is passing through Avonlea, he a candidate for the provincial election being held the following week. He is trying to buy his way to an election win. Some of the Avonlea voters see through his tricks, however some out of circumstance get caught up in his manipulation. Meanwhile, it's Harvest Festival time, and the children in particular are looking forward to the party. Felicity is sure she will win best costume as she does every year. Clemmie, who does like harvest time, doesn't seem to allow herself to enjoy the party due to her shyness. Sally and Jane...
The King's Aunt Arabella has just passed away. For fifty years in the King's attic sat her blue chest, which she asked to be opened only after her death. She left it there when she left Avonlea for good shortly after her fiancé committed suicide the day before their planned wedding. There is great anticipation amongst the family of treasures in the chest, but they find primarily moth eaten wedding mementos. Sara is certain that there is more - why would Arabella forbid the chest to be opened otherwise - and she indeed does find something hidden in the chest, something...
Blair Stanley makes an unexpected visit to Avonlea. He brings good news: the trial has concluded, and he has been acquitted. However, the business has to be rebuilt so he has much work to do. His plan is to take Sara back to Montréal tomorrow morning, his haste due to his strained relationship with Hetty. Upon meeting again, time has not healed any wounds between the two. Sara is happy to see her papa, but is saddened to leave Avonlea, especially that she will be missing the skating festival. But what's worse is that if she and Blair leave with Blair still on strained...