During a picnic at the School for the Blind, Albert and a friend sneak into the basement to smoke a pipe that they stole from an elderly visitor. Hester Sue shoos them out of the basement. In Albert's haste to leave, he leaves the pipe with the still-burning tobacco in the basement.
The pipe begins to smolder for several hours--well into the evening. Hester Sue, Alice Garvey, and Adam--exhausted from the long day--are relaxing over coffee in the kitchen, completely unaware that the entire basement is now up in flames. When Adam notices a smell of smoke, Hester Sue goes to check it out, and when she sees some smoke creeping out of the basement door, she opens it--unintentionally allowing the fire to permeate the upstairs area.
Adam, Hester Sue, and Alice rush to wake up the children and get them out of the building. Adam runs into his bedroom, where Mary is with the baby. Adam grabs her hand and leads her out, leaving the baby in his crib. Shockingly, Mary does not even call out or try to grab her son. Meanwhile, Hester Sue and Alice are helping get the other children outside. When Mary finally remembers about her baby, Alice shoos her outside and goes to get the baby herself. But then she hears a child calling out from the bathroom, so she leaves the baby in the bedroom and runs to tend to the other child, who is stuck in the bathroom. She manages to get him out and send him outside while she goes to get the baby.
Of course, by the time Alice gets the infant in her arms and turns around to get outside, it is much too late. The doorway is now nothing but a wall of fire, and Alice and the baby are trapped on the other side of it.
The child who was stuck in the bathroom stumbles outside, coughing and disoriented. Hester Sue frantically runs back in to look for Alice, but the entire upstairs is in flames, so she rushes back outside. Then, to her horror, she sees Alice from the upstairs window, screaming and trying to escape by breaking a window. Now aware that their baby is still in there, Adam and Mary are in a state of panic. Adam tries to go back in, but Hester Sue holds him back, telling him it is too late. Now, there is nothing left to do but sit in the grass as their beloved blind school burns down--with Alice and Adam Jr. unable to escape.
The next morning, the blind school is completely gone. Alice Garvey's body has been found, but not Adam Jr's. Mary, who is in a state of shock, refuses to go anywhere until her baby is in her arms. Charles finds the baby and has his dead body in his arms as he walks up to Caroline and Mary. Mary insists on holding him, and in a total daze, she starts rocking him and singing him a lullaby.
Doc Baker and Charles walk through the rubble, trying to find some trace of what may have caused this tragic fire. Sure enough, in the area that was once the basement, Doc Baker finds the pipe and determines that this must have been the cause.
Later that night, at home, Charles tells Laura what Doc Baker found. Albert, who overhears, is stunned as he learns that the pipe he threw away carelessly was the cause of the fire.
A couple days later, when the funeral takes place, Albert--who has still not told anyone about his use of the pipe--is an emotional wreck and talks Charles into letting him stay home. Meanwhile, Mary--who woke up the night before screaming for her baby and smashed her hands through some windows--has now officially slipped into shock. Nobody can get her to rise from her bed and come to the funeral--all she does is stare into space and softly hum the same lullaby to herself.
Then, of course, there is Jonathan Garvey, whose anguish over his wife's death cannot be put into words. Drinking is the only way he can deal with the pain right now, and in doing so he alienates his young son Andy, who is also trying to cope with the loss of his mother. It gets to the point where Jonathan can no longer even look at his own son because it reminds him too much of Alice.
Charles takes a pain-stricken Albert with him to Sleepy Eye. He knows that the boy is going through something, but since Albert won't talk about it, Charles just assumes that he's still shaken up over the fire. When they are in a store shopping, Charles attempts to cheer Albert up by buying him a slingshot--but just before he's about to pay for it, Albert comes across a music box. The box plays the EXACT same lullaby melody that Mary--who is still in shock--hums to herself all the time. Thinking that this is Mary's favorite song, Albert asks Charles if he can get this for Mary instead of the slingshot for himself. Charles agrees, and so when they get back to Walnut Grove, Albert goes right to the hotel to see Mary and give her the gift. When Mary won't open it herself, Albert opens it for her--and starts playing the music. Suddenly, a strange look comes over Mary's face, and she starts screaming violently "My baby! My baby!" over and over. Terrified and in tears, Albert says "I didn't mean it! It was an accident!" and runs out, while Laura and Nellie run upstairs to help Mary.
Meanwhile, with Jonathan's pain and alcoholism flaring deeper, Charles intervenes and helps his friend not only come to grips with this tragedy, but also learn to embrace his child again--who is a living piece of Alice. It helps Jonathan a great deal when Charles tells him how disappointed Alice would be to see her husband carrying on this way. "We need to try and live in a way that will make them proud," says Charles, and this is of particular significance to Jonathan, who finally finds the strength to make amends with Andy.
In the next scene, everyone goes over to the hotel to see Mary, who is now out of her shock and finally acknowledges that there was a fire, and her baby died in it. The music box dug up all those bottled-up emotions, so she was able to recover. Mary then remembered the words Albert kept screaming over and over, and she doesn't understand what he meant by them. Hester Sue, who is also there, puts all the pieces together and remembers how she shooed Albert and his friend out of the basement that day. She realizes that they must have been smoking, and that's where the burning pipe came from.
Charles rushes back to the house to look for Albert, but he has run away. He and Jonathan go on a frantic search to locate him. First, though, they go over to see Albert's friend, who was with him on the day of the picnic. They get the boy to break down and admit that they were smoking. From there, Charles and Jonathan go to find Albert, and finally Jonathan tracks him down. Albert resists and keeps saying it was his fault, but Jonathan assures him that it wasn't anyone's fault--it just happened, and now they all have to move forward. Jonathan and Albert then go to meet Charles, who calls out "I love you" to Albert. Albert runs to him, and they hug.
A few days later, there is a gathering at the site where all the debris is from the fire. Adam--who went to spend time with his father after the fire--talks about how his dad has asked to fully finance the building of the new blind school. Adam now realizes that people can change--even his father, whom he once resented. Adam's father also requested to name the new school, and he sent a special plaque back to Walnut Grove with Adam. Adam asks Mary, Jonathan, and Andy to step forward as he unveils the sign: "The Alice Garvey and Adam Kendall Jr. School for the Blind."
"May we make them proud," are the last words of this emotional episode, spoken by Adam as everyone watches in dead silence.