Quoyle visits his aunt’s shop, where he is formally introduced to her employees, Mavis Bangs and Dawn Budgel. Afterward, he and Agnis go for lunch at a local diner called Skipper Will’s. Quoyle expresses his deep concern about his daughter Bunny, explaining that he thinks her behavior is abnormal. He describes her recurring fear of a white dog, citing a recent incident where she screamed that a dog was scratching at the kitchen door, an outburst so convincing it frightened him, too. The aunt adds that Bunny claimed a “dog-face stone” in the garden bit her finger.

The aunt suggests Bunny might just be sensitive to things others cannot perceive and advises Quoyle to wait before consulting a child psychologist. As Agnis assures Quoyle that Bunny is too young to lose her innocence, she privately reflects on something that Quoyle’s father, Guy, did when she was around Bunny’s age. Back at the shop, the aunt tells Quoyle she must work late to finish the upholstery for the Melvilles’ yacht.

Quoyle picks up his daughters from the home of Beety and Dennis Buggit. While there, Dennis tells a story about a local fisherman who was once seized by a giant tentacle. He also mentions that his father, Jack Buggit, has “the gift” and knew through psychic intuition the moment his other son, Jesson, died at sea.

An elderly man, Skipper Alfred, arrives and recognizes Quoyle’s family name. He calls the Quoyles a “savage pack” and recounts a local legend of them cruelly nailing a man to a tree. He also mentions that the only Quoyle remaining in the area is “the odd man, Nolan, down along Capsize Cove” (139). Before leaving, Skipper Alfred gives Bunny a small brass square as a gift for her interest in carpentry. Quoyle worries that Bunny may have overheard the violent story about their ancestors.

Quoyle writes an article about the Melvilles’ boat, titling it “KILLER YACHT AT KILLICK-CLAW” and noting it was built for Hitler (141). He skips his assigned story covering an ATV accident in which Mrs. Diddolote sprained her wrist, deeming it too minor, and submits the yacht piece instead. His coworker Tert Card warns him that Jack will be furious about the insubordination. When Jack arrives at the office, he summons a nervous Quoyle into his office.

To Quoyle’s surprise, Jack praises the article, telling him it was very popular with readers. Jack asks him to write a regular column to be called “The Shipping News,” featuring a different boat from the harbor each week. Jack also says he will order a computer for him. At 36 years old, Quoyle reflects that this is the first time in his life anyone has ever told him he has done something right.

Quoyle gives Wavey a ride home with her young son, Herry Prowse, who has Down’s syndrome. Wavey passionately describes how she organized other parents to successfully petition for a special education class for their children. When they arrive at Wavey’s house, Bunny sees a wooden dog in a neighbor’s yard and works herself up into a display of fear. Quoyle suspects she is inducing the thrill for effect. Later, during a boat ride, Bunny claims to see a “dog’s white face” in the boat’s bow wave and grips the seat howling (150). Quoyle tries to reason with her logically, but she remains terrified.

That evening, Agnis invites Dawn Budgel for a lobster pie supper. During the meal, Dawn confesses she dislikes lobster and only eats salad. Agnis reveals that the Melvilles have disappeared from the harbor in their yacht, leaving without paying for the extensive, custom upholstery work she and her employees had just completed.

During a lunch break on the wharf, Quoyle’s coworkers, B. Beaufield Nutbeem and Billy Pretty, trade local stories. Nutbeem discusses a string of sexual assault reports, including one where a man was attacked with a tomcod (a small codfish). Billy explains that Misky Bay, once the region’s main harbor, was rendered unusable after World War II when so much ammunition was dropped overboard during wartime loading that no one dares anchor there.

Quoyle reads them his latest article, a piece about the death of Sam Nolly, a local man who was killed when his new long-liner, the Buddy, exploded due to a propane leak. Billy mentions that he needs to visit his father’s grave on the deserted Gaze Island and invites Quoyle to join him that Saturday.

Billy Pretty takes Quoyle in his skiff to the abandoned Gaze Island. On the way, Billy informs him that his distant relative, Nolan Quoyle, is still living in the area and believes the aunt’s house rightfully belongs to him. Billy also describes the Quoyle ancestors as a group of “wild and inbred, half-wits and murderers” (162). They navigate through a hidden, narrow channel, or tickle, into the island’s secret harbor.

Billy explains that the government resettled all the families, including his own, off the island in 1960. He leads Quoyle to a cemetery and, while tending to a grave, tells him the story of his father. His father was originally William Ankle, an English “Home boy” (an orphan sent to Canada for farm labor), who survived the 1909 shipwreck of the Aramania off the island’s coast. The local Pretty family hid him from officials and adopted him. Billy then shows Quoyle a much older, dilapidated cemetery, revealing it as the burial ground of the Quoyles, who he says were “wrackers” (pirates who lured ships to their doom). He explains that the green house now on Quoyle’s Point originally stood on Gaze Island before the Quoyles left, dragging it across the sea ice; the tipping point that finally drove them away was their refusal to attend Pentecostal services. Suddenly, a dense fog bank appears, forcing them to flee the island.

As they race away from Gaze Island, Quoyle spots a suitcase washed up on a rock known as the Net-Man. Using a gaff hook, he manages to retrieve the heavy, locked case. Soon after, the fog envelops them completely, and they become lost. A powerful, foul odor begins to come from the suitcase.

Billy identifies their position by recognizing a pair of needle-shaped rocks called the Knitting Pins, determining they are east of Killick-Claw. Reciting an old navigational rhyme from memory, he successfully pilots the boat into the harbor of Desperate Cove. They go to a small restaurant to eat and call Tert Card for a ride home. While waiting, Quoyle takes the suitcase outside under a wharf light. He smashes the lock with a piece of pipe, and the case springs open with a horrific stench, revealing the severed head of Bayonet Melville.

In the aftermath of the discovery, Mavis Bangs gossips at the upholstery shop, praising Agnis’s calm reaction. She separately remarks that Quoyle’s daughter Bunny is a “real Quoyle, tilted like a buoy in a raging sea” (180). Unbeknownst to her, Dawn Budgel uses the office typewriter to send out dozens of applications for jobs far away from Newfoundland.

Meanwhile, Quoyle gives Wavey and Herry a ride home from school in the rain. As they pass two men mending nets, Wavey points out her brother, Ken Prowse. Ken tells Quoyle that his father often watches the old Quoyle house across the water with a spyglass. He then gets a ride with Quoyle back down the road to his net and encourages Quoyle to visit Wavey again soon.