Emily discovers the ""Disappointed House"" which looks out over the seashore. She also gets a surprise when Teddy kisses her.

A carpenter was building it for his wife-to-be when she called off the wedding days before it was set to take place. Both now dead, Emily must help the ghosts to see the truth so that they can finally be together.

In the process revealing one of Aunt Laura's secrets. Emily also meets Perry Miller, who becomes the new New Moon chore boy.

Oliver, Emily's cousin, announces that New Moon actually belongs to his father. His girlfriend Maida is pregnant and loses her job and is left penniless. Emily, Ilse, Perry and Teddy, get her settled in the Disappointed House and end up helping to deliver her baby. Maida leaves town, 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 when Aunt Elizabeth finds out who he is she sends him packing. His mother Alma and Aunt Elizabeth had both been in love with the same man, but he married Alma.

Emily, Ilse, Perry and Teddy also defy an order not to go into town to watch the hanging of a murderer.

Miss Brownell leaves her post as teacher and marries the school inspector.

Her replacement is Mr Carpenter, a once university professor. He encourages the children to find their own talents, the only problem is that he drinks.

Emily, Perry, Cousin Jimmy and Aunt Laura have to get Mr Carpenter cleaned up for his final evaluation after he staggers to New Moon drunk.

Ilse Burnley wants to learn about her dead mother because her father never talks about her. Emily, whose own father is dead, feels sympathy for her and wants to help find some information.

While visiting her Great Aunts they tell her the tales about what has happened to Ilse's mother. After running away Emily snares her foot in a rabbit snare and is rescued by her Cousin Dean Priest (2nd cousin, twice removed).

Aunt Elizabeth find Emily's treasured 'Letter Bills' hidden in the attic. Laura announces her engagement to the rest of New Moon.

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.

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.

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).

In a surprise ending for the season we watch four separate outcomes for Laura's wedding day. Each is seen in the imagination of Emily and for a change we get to see the full talents of the actors get a chance to shine. However, this episode also leaves the question, which was the real thing?

Lightening is said to be able to change a person's life and so it does for Jimmy who does indeed have a change in life. After the bolt strikes him Jimmy is left in a coma, desparetly wanting Jimmy to be okay Emily wishes that he could be a ‘man of great wisdom'. When he awakens her wish has been granted, the damage which he sustained from the well accident seems to have vanished. Life changes dramatically for Jimmy as he achieves everything including world acclaim. But nothing can be compared to the joy of seeing Eve again.

One of the more hard to believe stories, this episode focuses on Perry and his life. His mother was sent to prison for murdering her husband ten years previous with an axe. 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.

Small pox spreads through Blair Water and Robbie Burns dies. Trying to help as many as he can, Dr Burnley turns his house into a hospital. Ilse then also falls ill.

The truth is sometimes better left on the shelf and that is what Emily learns when she tries to overcome her writer's block. Deciding to write about what she knows she sees Rhoda's mother, Velma, as the perfect subject. ""Confessions of an Adulteress"" causing more problems when Rhoda falls for Harrison Bowles who is visting New Moon, soon Rhoda is losing control of all angles of her future.

While her friends all head off for Shrewsbury Emily is left behind in Blair Water because her Auth Ruth refuses to have Emily stay with her. Bitterely disappointed, Laura tries to cheer her up by telling Emily that she has left Ian for good. An ally of sorts then comes to Emily's help and her future takes a turn for the good, but things aren't so good for Laura who discovers something unexpected.

Emily is feeling very insecure with her future as she begins to take the entrance exam for college hoping to get the scholarship - which Ilse and Teddy are also trying to get. On the way to exam they meet Jack and Emily pays for him to do the exam as well. Ilse tries to play matchmaker to get Jack and Emily together so she can go after Teddy.

The family is whole again when Jimmy returns home. Laura still wants a divorce but Ian Bowles returns and he now owns a share of New Moon. Emily comes up with the idea to marry in order to pay for Aunt Laura's divorce so she can retain rights to the farm. She tries to become a mail order bride. While she is writing it Teddy arrives, at first she ignores him, but when he climbs up to her window they go outside to talk.

Emily is feeling as happy as can be and has been writing for weeks and sending her work off.

As she is waiting Rhoda takes off with Emily's mail before she gets a chance to see it. She does this for a while as Emily is receiving acceptance letter and money cheques from a New York publisher Thelonius Grand. Her plans goes astray when the publisher days that he is coming to the island to meet Emily.

It all comes out in the end although Rhoda nearly pulls off the scam only to have Emily give her a gift.

Ian also leaves New Moon and is believed to have committed suicide. He gave his rights up to Laura for New Moon and she is left to raise Margaux's son.

Overjoyed at finishing her first book she goes to see Teddy to see what he thinks of it. Only he breaks her heart when he is brutally honest about it bringing back memories of Dean Priest.

Emily then falls down the stairs and remembers back through a series of flashbacks the moments in her life that have shaped her future.