Emily starts school with a teacher more cruel than her Aunt. Cousin Jimmy is ordered by Aunt Elizabeth to drown Pandora, Emily's cat. Jimmy remembers that Elizabeth pushed him into a well when he was a child, causing his brain damage.
Miss Brownell continues persecution of select students. Emily has visions involving the mysterious Disappointed House. Perry Miller and Teddy Kent contend for Emily's attention. Laura and Jimmy begin to rebel against Elizabeth's tyranny.
Emily and Ilse are curious about Lofty John and go searching on his property to find out more. After catching Emily he forces her to eat a 'poison' apple. Despite trying her best to be brave she prays to her father in heaven.
While searching through the attic Emily comes across her mother's doll and Aunt Laura restores it for her. Aunt Laura meets Ian Bowles and falls in love with him...until she finds out the truth which sends her back home in tears.
Oliver, Emily's cousin, announces that New Moon belongs to his father. His girlfriend Maida is pregnant and destitute. After Maida has her baby in the Disappointed House, she leaves and Oliver takes responsibility for his child.
Young Duncan McHugh blames himself for his mother's poverty and depression. After an embarrassing incident at school, Emily befriends Duncan and brings him to New Moon, but Aunt Elizabeth finds out who he is sends him packing.
Miss Brownell leaves her post as teacher and marries the school inspector. Mr. Carpenter, her replacement, encourages the children to find their talents. The only problem is he drinks and has to get clean for his final evaluation.
Ilse wants to learn about her mother because her father never talks about her. Emily feels sympathy for her and wants to help find some information. While visiting her Great Aunts they tell her what has happened to Ilse's mother.
Emily decides to find out the truth about Ilse's mother. Cousin Jimmy and Perry, along with Ilse, break into a warehouse trying to find out if she sailed away or stayed in Blair Water. During a faver the truth is finally reveled.
When a raccoon savages Emily's cat Pandora, Aunt Laura takes the cat to Dr. Burnley where they share a bitter-sweet moment. When Ian Bowles asks Laura to marry him, she says yes, but not with her whole heart.