The Saddle Club befriend Raffael and his mother, both itinerant workers, who arrive at Willow Creek with Raffael's beautiful horse, Diablo. Then Raffael is accused of horse-theft by a local farmer. Melanie and Ashley set up a Pine Hollow news sheet complete with gossip column. Lisa begins to like Raffael. Diablo comes up missing and the girls, Phil, and Raffael set out to find him.

The Saddle Club help Raffael rescue his horse, but he is forced to offer Diablo for sale when his family's life savings are stolen. Mrs. Atwood buys Diablo for Lisa so Raffael will leave. Lisa is especially saddened by Raffael's departure. Lisa does the right thing and sets Diablo free to roam in the wild.