Charles and Caroline visit Walnut Grove and are pleased to be able to stay in the 'Little House' when John and Sarah Carter go out of town. Then the townspeople learn that a land development tycoon, Nathan Lassiter (James Karen), has acquired title to all the land in Hero Township, which they had believed to be homesteading land. Having failed to defeat his claim on legal grounds and even with guns against an army cavalry unit, the townspeople are inspired by Laura to vent their anger at what they see as an injustice, and they decide upon a drastic plan of action. When Lassiter arrives to claim the town, he finds all the town buildings dynamited, and the townsfolk leave to start new lives elsewhere, as many of them have done before.
In Burr Oak, Iowa, Charles gets a promotion as a Purchasing Agent, and he takes Albert with him on a buying trip to Minnesota. En route, they stop at the University of Minnesota where Albert plans on pursuing his medical endeavors, then they reunite with family and old friends in Walnut Grove. Albert finds romance with a girl called Michele Pierson, and Charles encourages the local farmers to start a cooperative to enable them to compete with the big farms. However, Albert starts suffering from serious nosebleeds and exhaustion and is diagnosed with leukemia. Ultimately, he chooses to go back to Walnut Grove, where he spends his time making special memories and receives the offer of a four-year scholarship from the university he had planned on attending. Finally, Albert, Laura and Michele join Miss Plum and the local school children in their annual climb to 'the keepsake tree' at the top of Harper's Bluff, where they join hands and raise them in a celebratory salute.