After having overthrown the Weasels in the battle of Toad Hall, Toad hosts a celebration dinner for his friends. He reminisces about his time in prison, escape from jail, his exploits with the barge woman, etc. His friends are less than impressed with how he handled some of the situations, but Toad gets offended when they tell him so.

Invited to the weasels' den for a 'literary evening', Toad is taken prisoner and a ransom demanded. Badger has no intention of paying for his return, but Toad's incessant chatter drives the weasels to distraction, so they play a final trick on him before letting him go free.

Mole hears sounds which he cannot account for. It leads him to fear that there might be a ghost in his house. Eventually, though, he discovers that the sounds are produced by a hedgehog which has fallen into a crevice immediately above his burrow. With the help of Rat, he saves the animal.

After Rat's place is shaken by the passing of a great steamer, he and Mole hear the calls of the riverbank youngsters, who have lost their friend Billy (a fieldmouse) in the commotion. A desperate search for ensues, and he is found clinging perilously close to the weir. Rat and Mole stage a brave rescue, and bring the youngsters back to the rat's to dry off and have a hot drink. Rat admonishes the youngsters for playing dangerously on the river, before entertaining them with a rendition of "We'll Go Boating".

The weasels buy the part of the Wild Wood upon which stands the entrance to Badger's home. They order Badger to vacate the property. When Badger takes the weasels to court, the Judge decides in their favour, as the Weasels' deed to the property appears to be valid. It is Mole who saves the day when he discovers a Roman document signed by Julius Caesar which conveys the ownership of the area that is now the Wild Wood to the Badgers and their descendants. With this document in hand, Badger is able to chase the Weasels away only minutes before they take permanent possession of his burrow.

Mole's cousin, a famous literary figure called Auberon Mole, comes to stay after being invited by Toad to a 'literary soiree.' Mole's friends deem his dwelling and appearance too humble for the famous guest, and 'try to give him a little bit of style'. Toad and Rat redecorate Mole's house, and Badger sets out to teach Mole a smattering of Latin and Shakespearean drama. Eventually Mole decides to resist the attempts to have him present himself as someone he is not. Auberon and Mole have a lovely time, and the others are somewhat ashamed of their earlier actions.