Not long after the Hollisters, Indy and Emma Rhodes arrive on Wicket-ee-nock Island, they discover that something is very much amiss. The Franklins, who live on the island, seem to be hiding something in their barn and warn them not to go near it! A prowler is seen near the abandoned inn where the Hollisters are staying. Later, their belongings are ransacked, and they receive a fake telegram, supposedly from Mrs. Hollister, ordering them to return home.
Then, one night, the ghost horse looks eerily out of the fog. When the Hollisters realize that someone is trying to scare them off the island, they are determined to find out why. A man with a beard and a foreign accent saves them from drowning, but then disappears into the night.
A pair of Lipizzan horses, a scrap of paper bearing a coat-of-arms, and a secret tunnel, provide several clues, and after experiencing some harrowing moments, the Hollisters set out to find the valuable diamond encrusted coat-of-arms that is the heart of the mystery of the ghost horse! In the process, they learn a great deal about the work of the Audubon Society and about the training of the world-famous Lipizzaners.
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