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 and sends him packing.
Trying to discover where Aunt Laura has run off to, Emily and Ilse go to see Ada Pickett. The girls see three different fates for Laura, one of which is the truth.
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.
After the death of her parents, Emily Byrd Starr is reluctantly taken in by the odd (and scary) collection of relatives of New Moon farm on Prince Edward Island.
A beautiful free-spirited french balloonist crashes into the lives of everyone at New Moon. Now a soldier, Perry Miller returns for a visit and then marches off to the Boer War.
Perry lived through the torments at school but he had long since forgotten about his mother. But Aunt Thom plans to break his mother out of jail and he has to help.
Emily considers herself "at war" with an evil ogre when cruel Aunt Elizabeth Murray forbids reading and writing and tries to do away with Pandora the cat.
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.