The boys launch their boat and row across the lagoon, exploring small islands before heading out to the coral reef, which ignites their sailing spirits. The perpetual breaker awes them, and Ralph observes various stages of coral island formation along the reef, from living coral building underwater to dead coral above the waterline, and early vegetation taking root on new islets. Back at camp, they notice the keel wearing down on the sand, but Jack solves this by attaching a replaceable false keel beneath the real one. In three days, they rig the boat with a mast and sail. Peterkin creates a fishing line while Jack fashions hooks from ironwood, fish bones, and his brass ring. They see porpoises, swordfish, and sharks, establishing a rule requiring one person to remain in the boat during deep-water swimming. A sperm whale surfaces close at the reef. After rain, they discover small fish in previously dry land pools, and Jack theorizes waterspouts may lift fish from the sea and deposit them inland.

While discussing a planned trip to Penguin Island, the boys spot a dark line on the horizon that proves to be an enormous wave. It crashes over the reef, floods the lagoon and woods, and deposits their boat inland in a bush. Recovering and repositioning the boat takes two days, and clearing storm debris from the bower takes nearly a week. During preparations for the penguin expedition, Peterkin chases a pig over a precipice and is found unconscious at the bottom. After the boys revive him, they stock the boat with breadfruit, yams, coconuts, ducks, and pigs.

They navigate the reef passage and sail twenty miles to Penguin Island. There is not much vegetation, but there are a lot of different birds. The penguins stand upright on short legs and use their scaly-feathered wings to swim underwater. The boys watch mothers feed young by regurgitation and teach swimming by pushing reluctant chicks into the sea. One resolute penguin drives Peterkin backward to reach the water despite his attempts to block it. They resolve to leave but agree that penguins are wonderful.

Departing Penguin Island in the evening, a sudden gale rises and drives the boat toward open sea. Jack spots a low coral rock barely visible above the breaking waves and steers them into a narrow creek on its lee side. They secure the boat and shelter in a small hollow cave. The rocky formation measures barely twelve yards in diameter, and they cannot leave without risking being swept away. As darkness falls, the storm intensifies dramatically, forcing them to stay in the cave.

The storm continues for three days and nights. On the fourth morning the wind finally dies, and they sleep soundly before waking and rowing homeward. They reach the outer reef at nightfall and find the bower unchanged with the cat sleeping peacefully.

For many peaceful months the boys continue their island routines. Peterkin successfully crafts shoes from soaked hog hide, and they make garments from coconut cloth.

One day at Spouting Cliff, they spot two canoes: one carrying roughly forty people including women and children, fleeing a war party in pursuit. The boys grab clubs and hide to observe. The fleeing canoe reaches shore first, but the attackers, led by a massive chief covered in warpaint, overwhelm the defenders in combat, while the three women flee with two infants. The attackers bind 15 survivors and begin preparing a fire. The chief tears an infant from its mother and throws it into the sea, while the attackers drag a prisoner to the fire to be killed and eaten. Jack instructs Ralph and Peterkin to untie the captured warriors, and he leaps from the cliff, rushes the attackers with his club, and battles the chief, saving a young woman whom the chief was harassing. The freed prisoners join the fight, and together they defeat the attackers, killing the chief and binding the rest.

After the battle, Jack establishes peace by shaking hands with the chief, which leads to everyone shaking hands. He finds the infant thrown into the sea still alive and places it on its unconscious mother’s chest, and she revives. Jack leads everyone to the bower for a feast, and all fall asleep together. Upon waking, they learn names through gestures. The chief is Tararo, and the young woman is Avatea.

Jack directs burial of the dead from both sides. When a warrior, Mahine, begins cutting flesh from the slain chief’s corpse, Jack stops him. Tararo nearly kills the offender before Jack intervenes, though Mahine never forgives Jack. The group spends several days repairing the guests’ damaged outrigger canoe. Tararo signals for the boys to accompany them to another island, but they decline, presenting him with their rusty axe and a carved wooden pendant as gifts. Before departing, everyone shakes hands and rubs noses. Avatea is visibly saddened. The canoe departs, leaving the boys with an unexplained melancholy.

Ralph reflects on the strange mixture of good and evil he has witnessed, and Peterkin becomes noticeably more serious after seeing the violence between the indigenous groups. Their spirits gradually recover over the following weeks. One day at the Water Garden, Peterkin spots a schooner approaching. The boys rush to high ground and wave coconut cloth, hoping for rescue, but the ship hoists a black flag bearing a skull and crossbones and fires a cannon shot through the trees. It is a pirate vessel.

Pirates land, raid the bower, and toss the cat into the sea. Jack declares their only hope is the Diamond Cave, though Peterkin fears the underwater approach. As pirates close in, Jack and Ralph seize Peterkin’s arms and plunge into the sea together, dragging him into the cave. They spend an uncomfortable night in the damp chamber. In the morning Ralph swims out to scout, surfaces to find the island deserted and the schooner sailing away, and climbs to the clifftop to confirm their departure. Just as he declares aloud that the villains have been thwarted, a heavy hand clamps on his shoulder.