Four runaways, Mike, Peggy, Nora, and Jack, find a secret hiding place—a deserted island on a lovely lake. They build a willow-tree house, make their beds of heather and bracken, and grow their own vegetables.

Jack even manages to bring his cow, Daisy, and some hens to the island for fresh milk and eggs every day! But one day, invaders come to the secret island...

The story begins as Peggy Arnold, and younger twin siblings Mike and Nora, are living with a harsh aunt and uncle after their parents are thought to have been killed in a plane crash. Aided by Jack, an orphan boy they have befriended, they run away to an island on a nearby lake, and together they make a new home constructed with the branches of a willow tree, this much-loved "living house" being one of the highlights of the story.

However, living on one's own turns out to be far more difficult than they thought, and, along with a lot of fun and happiness, they also suffer a lot of hardship – especially when winter sets in.