Ruth is disturbed by the tall tales Timmy is telling to impress Willy Brewster--a problem compounded when he tells Willy and Flip that Mrs. Larson, a new neighbor living in a run-down house, is a witch.

During a game, the boys begin fighting and Flip is knocked out by a rock thrown by Rudy, who makes Timmy and Sam believe Flip is dead and it's their fault, so the two boys and Lassie run away to avoid disgracing their families.