The first episode takes the audience through a prequel of events which lead up to the two families coming to live together at number 1 Cloudstreet in 1943.

Years have passed, but little has changed. The Lambs are still bustlers, the Pickles do little. Rose's antipathy towards Dolly has grown — particularly when Dolly tells her she has to leave school and get a job. Rose's brother, cheeky little Ted (Dolly's favourite) is now a jockey and a hit with the girls. And Quick Lamb is still looking after his little brain-damaged brother Fish, and still feeling a sense of guilt over the fishing accident in which Fish nearly drowned. Soon, the pressure of those feelings leads him to snap and he walks out of Cloudstreet — despite his mothers orders for him to stay.