The plot of this film bears little resemblance to the storylines of any of the "Anne" source books because of legal disputes that were at the time ongoing between Kevin Sullivan and the heirs of Anne author Lucy Maud Montgomery. Ultimately, Canadian courts agreed with the heirs that Sullivan had withheld from the heirs contractually promised profits from the first two films in the series (Anne of Green Gables (1985) and Anne of Avonlea (1987)), and the courts also found groundless Sullivan's $55-million suit against the heirs.
This is the first film in the series not to be based on anything actually written by Lucy Maud Montgomery. But it is very loosely based on the 8th Anne novel "Rilla of Ingleside", actually written about Anne and Gilbert's 7th and youngest child, Rilla and her time during WWI.
When Anne and Gil return to Prince Edward Island, they tell Dianna and Fred that they are going to move to Glen St. Mary. In the books this is where they move to after they get married and where they live for the books Anne's house of dreams, Anne of Ingleside, Rainbow Valley and Rilla of Ingleside.