The Ingalls are forced to sell their house to the Carters and leave Walnut Grove to find a more promising life. Mrs. Carter begins printing a newspaper for Walnut Grove. Etta Plum becomes the teacher in Walnut Grove when Laura decides she wants to spend more time with Rose. Almanzo's brother, Royal, comes to Walnut Grove with his daughter, Jenny.

Royal has a very bad heart and asks Laura and Almanzo to take care of his daughter since he was going to die soon. Jenny is devastated by her father's death. After talking to Reverend Alden about heaven, she tries to commit suicide by drowning so that she could be with her father again. Jeb Carter is able to save Jenny although he can't swim. Laura convinces Jenny that she should do what would make her parents proud.

Harriet finds a bearer bond from Walnut Grove. She uses this to try to get people to follow her suggestions. She tells the town council that if she doesn't get her way, she will cash in the bond which would force the town to pay Mrs. Oleson over $10,000.

Mr. Stark has gotten himself so far in debt that he has lost his mind. He goes home and shoots his wife and daughter. Then he goes off and ends up at Laura's house. He mistakes Laura and Jenny for his wife and daughter, but when he sees Rose, he thinks that his daughter has had a baby.

A tiny circus performer, Lou, decides to look for work in Walnut Grove after his wife dies while giving birth to his baby girl. A prejudice Mrs. Oleson uses her power to make sure that the dwarf doesn't find work. She even threatens Mr. Anderson that she would close her account at the bank if he hired Lou. To keep the infant alive, the dwarf must steal food. Mrs. Oleson decides to press charges when she finds out who stole the food. When Nancy falls in a well, Lou risks his life to save the girl. That's when Mrs. Oleson decides that being small has its advantages and decides to drop all charges.

A traveling side-show comes to Walnut Grove. The main attraction is a wild boy. The wild boy escapes and becomes friends with the Wilders. The boy turns out to be Matthew Roger and the reason he acts wild is become he is given morphine.

Mr. Edwards keeps Matthew at his place, but Nancy Oleson tells on him. A judge comes and rules that Matthew be placed in an institution. Then Mr. Edwards makes a statement that everyone is crazy sometime. He convinces the judge to allow the boy to stay with Mr. Edwards.

Nellie returns to Walnut Grove and discovers that Nancy is a lot worse than she ever was. When Nancy isn't the center of attention, she runs away. Nels and Nellie search until they find her. Just when they think Nancy has learned a valuable lesson, she proves that she really hasn't.

The people of Walnut Grove are at first excited when the railroad wants to build through the town. This excitement doesn't last long. The railroad tells several people that they must leave their houses. The people make a stand at the Carter's place. This delay in building convinces the railroad to find a different route.

Laura's childhood friend, Jane Canfield, comes back to Walnut Grove. Although she is blind, she falls in love with Mr. Edwards, a person who was old enough to be her father. Jane then undergoes an operation which allows her to see again. After a lot of soul searching, Mr. Edwards tells Jane that she should go out and find herself a better life. At the end of the show, we see Mr. Edwards in the distance watching Jane leave on the stagecoach.

A minister that is passing through Walnut Grove arouses the suspicions of Reverend Alden and Mr. Edwards. Reverend Alden believes that he will lose his congregation to the other reverend. Mr. Edwards notices that this minister spends a lot of time with Mrs. Carter and Laura, which causes him to suspect the worse.

Jenny looses a necklace in a pond and almost drowns trying to get it. After the incident, she has partial brain damage and has to retrain herself to talk and walk. Jenny's friend, a retired doctor, helps Jenny to force herself to get better. Thanks to him, Jenny makes a complete recovery.

When Mrs. Carter's mother dies, Sarah Carter's father comes to town. He tries to get the Carters to come with home back to New York. He wants the Carters to have a better life. The Carters tell him that home sweet home is in Walnut Grove. After a while, Sarah's father begins to understand while the Carters feel this way.

The Older Brothers is a gang that used to have a notorious reputation. First they hold up Mr. Edwards but end up losing the money. Then they try to get ransom money for Mr. Edwards but that doesn't go very well.

Laura writes a book for a book writing contest. Her book is chosen. She travels to Minneapolis to work out a deal with the publisher. However, when the publisher wants her to change some parts in her book, she withdraws from the contest and goes back home.

When Albert continually breaks the law, Charles takes him out of the big city and back to Walnut Grove. Albert doesn't change in Walnut Grove because he is addicted to morphine. Charles finally forces Albert to stop using morphine. He stays with Albert while he goes through withdrawal. Thanks to Charles, Albert is no longer addicted to morphine. We find out at the end of the show that Albert will become Dr. Albert Ingalls.

Laura gives birth to a baby boy. The baby is fine and healthy for a while. Then for no apparent reason the baby dies. To ease her mind of the death, she blames Doc Baker for what happened to her baby. Doc's reputation declines so much that he must leave town to find work. Just before Doc Baker leaves, Rose comes down with small pox. Doc must stay quarantined with the Wilders for two weeks. Watching the Doc save Rose's life causes Laura to rethink her attitude about Doc Baker. Laura and the rest of the town convince him to stay on.

Jason Carter starts working for an old lady. Jason becomes great friends of the lady. However, Jason's mom believes the lady is being too nice. Jason is forbidden to work for the old lady until Sarah finds out that the lady will soon die.

No longer a mama's boy, Willie announces his engagement and plans to marry his sweetheart. All this upsets his mother greatly, who makes several attempts to get her way.

Mr. Montague stays at the Wilder boarding house while he is at Walnut Grove researching for a book that he is writing. Matthew Roger has a hard decision to make when his biological father shows up. Matthew decides to leave Mr. Edwards and go with his father. Mr. Edwards moves into the boarding house so he wouldn't be lonely anymore.