New Moon suffers tragedy with the death of Aunt Elizabeth who went missing at sea. The family then discovers that Elizabeth had borrowed money from Scottish relatives and that New Moon now belongs to them.

Still recovering from the loss of Elizabeth the family begins to fall apart in some ways. Jimmy confesses about how much he did love Elizabeth, and while trying to hide from her own fears, Laura becomes addicted to laudanum. Emily tries her best to convince the Scottish relatives that she will give them everything she owns in exchange for New Moon, only to receive a reply saying the they are coming to P.E.I. to claim it.

Emily begins to realise that despite how tough Aunt Elizabeth was, a part of her truly loved her and missed her now. Laura increases her intake of laudanum, then suffers inertia and stays in bed. Uncle Malcolm replies to Emily and says that he will not take the diamond she found as payment (not enough) and that they are coming to claim what is now theirs.

New Moon is on tender hooks after Aunt Isabel Murray arrives to 'take over'. Emily is horrified when Isabel tells her sher will no longer be allowed to attend school and that in place of it she will have to earn money. Next she tells Cousin Jimmy to kill one of his own cows for food and takes the household keys off Laura.

Teddy falls down an embankment while playing hide and seek with Emily and Ilse. The girls try to reach him, but before they can Mad Man Morrison picks up Teddy and takes him to Dr Burnley. With this in mind, Teddy's possesive mother then plots to to convince Teddy that Emily and Mad Man Morrison are romantically involved.

When Aunt Laura's addiction to laudanum worses, Isabel takes the step of putting her in an asylum without asking anyone else. Meanwhile, New Moon is up for sale and Stuart is planning on buying it. Emily doesn't want Laura in the asylum and goes to get help via Jimmy, Dr Burnley and Uncle Malcolm.

As Emily and Ilse continue to grow older, the adults are faced with some questions that the girls will stop at nothing to get answers for: The facts of life. Meanwhile, Ilse's father, Dr Burnley has accepted a position at Massachusetts' General Hospital. Not wanting to leave, Ilse and Emily plan to run away only to have Uncle Malcolm ruin it by getting ill to the point he is close to death. Dr Burnley saves the day and begins to redeem himself in the eyes of Blair Water residents.

The Devil is in Blair Water, or so says the Reverend Nicholas Pitch who has arrived in Blair Water to rid the town of him. Hysteria immediately follows as the townspeople are suspicious of everything and blame the Devil. Meanwhile, the younger townspeople start to ask questions about the Devil.

Hysteria continues in what can be likened to the Salem witch trials. In all this it is Laura who become calm (the Devil has of course left her).

The attention of this episode is based on that old faithful story of love. The girls desperately want to ensure that marry and pray to St. Agnes for help. However, being the age they are, it is Cousin Jimmy who gets the answer when he falls for Eve Kinch. From a poor family, they seek shelter at New Moon. All goes well between the two until Eve's father, Abner finds out and loses his temper. Then the revelation comes, Eve is pregnant.

Despite disappoval from Eve's father, Abner, Jimmy plans to give Eve everything that she wants. Emily causes more problems when she gets the idea Eve is a Saint and wants it is be official by getting people to sign a petition. Abner is determined to keep the two lovers apart and finds Jimmy and Eve when they secretly rendezvous. After a struggle Abner Kinch is dead. One question remains, who killed him: Eve or Jimmy? Jimmy risks everything for the woman he loves…

Poor Baby Ollie is again being handed about after he is left on the Murray's doorstep.

Hoping to reunite Ollie with Maida Flynn, his mother, the children devise a plan. However their plans are not to be as Perry's Aunt Thom and new ‘friend' the Madame Marlena shatter the plans.

Isabel, knowing full well of Emily's plans, forbids her to enter into the ""Island Romance Contest"".

Having written the story of ""Isabella of the Highland"" Emily reluctantly puts it away only for Ilse to find and submit. When it wins first prize Isabel wants Emily to renounce the award and takes both her and Aunt Laura to Charlottetown to do it.

Ian Bowles makes a return to the series with a pregnant Margaux Lavoie. Laura must face the truth as the lies and deceit become too much