Tragedy strikes New Moon as Aunt Elizabeth is lost at sea. Adding to Emily, Laura and Jimmy's worries is the fact that Elizabeth has borrowed heavily from the family's Scottish relatives to finance New Moon. These unknown relatives are, de facto, the owners of their home.
The Murrays are devastated by the loss of Elizabeth: Jimmy confesses his deep affection for her and Emily realizes that she was their protectress. Trying to escape her fears, Laura is becoming addicted to laudanum. Having offered the Scottish Murrays all her worldly possessions in return for New Moon, Emily receives a letter announcing that the relatives are on their way to PEI to claim what is theirs.
Fighting to stay well, Laura feverishly prepares New Moon for the arrival of Malcolm and Isabel Murray, the Scottish relatives who have he power to sell New Moon and send them all to the poorhouse. Emily fantasizes Isabel as a lyrical kindred spirit. In fact, she turns out to be a bitter, austere spinster. Her father Malcolm is suspicious and fierce. New cast members: John Neville as Uncle Malcolm, Linda Thorson as Isabel Murray.
Tension mounts after Isabel Murray takes over New Moon. Emily is forbidden from attending school. She must, instead, earn her own keep. Isabel also decrees that, in order to feed the family, Jimmy must slaughter one of his beloved cows. And she relieves Laura of the household keys.
While playing in a field with Teddy, Emily falls down nose to nose with Mad Man Morrison, a bit of a spooky character whose little girl has died a while ago. Teddy helps Emily get up and the two run back to New Moon with a few scratches and a good fright. Mrs. Kent, Teddy's possessive mother is jealous of the friendship between Emily and her son. Convinced that Emily is out to steal her Teddy, Mrs. Kent tries to separate the two by using "witchcraft" in the form of a doll that's given to Emily and is supposed to make Mad Man Morrison believe that she's his lost daughter. Guest stars Greg Malone as Mad Man Morrison.
New Moon is for sale and the snooty Stuarts plan to buy it. As Laura's addiction to laudanum worsens, Isabel commits her to an asylum without consulting the family. Emily rallies Jimmy, Dr. Burnley and Uncle Malcolm.
