Andrew and Tess show Monica how to skip stones on Lake Paradise, and notice that this lake is “dead” in that it has no birds, no fish, no people. It is Monica’s assignment to help revitalize this lake, and at the same time, revitalize the life of Blake Chapman, who has returned to Lake Paradise after twelve years, as a representative of the Mayforth Corporation, the company that wants to purchase the property around Lake Paradise. Blake is stunned when “Monica’s Bait and Tackle Shop” springs up on the lakeshore, especially when he realizes that Mayforth doesn’t own the small patch of land the shop rests on.

Monica, enjoying her new job as storekeeper and friend of the worms, refuses to sell the shop, thereby impeding the company’s progress and infuriating Blake and the townspeople, including, Earl Gray, an old-timer, his hearing-impaired daughter Laurel, her son, Jeremy, and Eb and Flo, one-time Vegas performers. They all stand to profit in different ways if the property is sold to Mayforth, which the townspeople presume will turn the lake into a resort. Laurel is somewhat shocked to see Blake again, who suddenly left town after an accident on the lake (the night he was to propose to her) ruined his chances of becoming a professional hockey player. Monica realizes that twelve-year-old Jeremy is Blake’s son, and encourages Laurel to tell him.

But when bulldozers come to the lake to begin destruction, Monica chains herself to a tree to make them halt. She asks Blake to reveal the true reason Mayforth wants the property, to build an outlet mall. The townspeople feel Blake has lied to them, and Laurel tells Blake to “go to hell.” Blake has Monica arrested. In jail, Tess reprimands Monica for her methods, but when Blake arrives Monica makes some progress. She tells Blake that he lost his soul the night of the accident, and he came back to Lake Paradise to get it back. Blake goes to the lake to think, and he is visited by Monica, the Lady of the Lake.

She reveals herself as the angel who saved Blake and Laurel the night of the accident, and tells him that God spared Blake’s life so that he would realize life to its full potential. After some time in deep reflection, God reveals to Blake that Jeremy is his son. Blake reunites with Laurel, and the next day they go to the lake, where, in front of the townspeople, Blake tears up the Mayforth contracts, proposes to Laurel, and makes peace with himself. At the same time fish and birds return to the miraculously revitalized lake.