Eighteen years later, Susan and Elizabeth-Jane return to Weydon-Priors searching for Michael. Elizabeth-Jane believes that Michael is just a relative, since Susan has kept her marriage a secret. Susan looks for Michael because she believes that he can help them now that the sailor, named Newson, has died. The women stop in the furmity seller's tent, which is still there. They learn that Michael stopped in the tent a year after the auction and left word that he lived in Casterbridge. Susan and Elizabeth-Jane leave for Casterbridge right away.
When the women arrive in Casterbridge, they learn that Michael has become extremely influential as a rich merchant and as the mayor of the town. The night they arrive, the townspeople are discussing Michael's bad business deals in selling grain. A young Scotsman, Donald Farfrae, overhears the discussion and gives Michael some suggestions for making the grain usable. Farfrae also engages in a light flirtation with Elizabeth-Jane.
Eventually Michael and Susan meet secretly. They decide to keep their past relationship a secret from Elizabeth-Jane. In fact, Michael suggests that they begin their relationship again. Susan should rent a cottage and allow Michael to meet her in a respectable manner. Susan agrees, and soon after they marry. Michael hopes that someday he can openly love Elizabeth-Jane as his daughter. At the same time, Michael has success in business as well by choosing Farfrae as his general manager. Farfrae's impresses all the townspeople and gains the likings of Elizabeth-Jane once again. Michael has taken the young man under his wing and regards him almost as a brother. The only enemy Farfrae has is Joshua Jopp, a man who wanted the position of general manager.
When Susan and Michael remarry, Michael’s business is absolutely booming thanks to Farfrea. The new wealth to which Elizabeth-Jane has been introduced produces a new beauty in her. Michael becomes fond of her and wants her to take his name legally. Susan, however, is reluctant to agree. Farfrae also takes an interest in Elizabeth-Jane. However, Elizabeth-Jane's shyness and discord between Farfrae and Michael have stopped any hope of a romance. Farfrae and Michael first have a disagreement over the punishment for a worker, Abel Whittle, who is nearly always late. Next, during a celebration, Farfrae's party is a success while Michael's is a complete failure. The townspeople openly thank Farfrae, which leads Michael to say that Farfrae's job as general manger is over. Farfrae resigns and opens up his own store.
Susan gets sick and in a couple of weeks dies, leaving a letter for Michael that is not to be opened until Elizabeth-Jane's wedding-day. Michael is lonely from the arguments with Farfrae and the lack of any friendship with Elizabeth-Jane, so he tells the girl that he is her father. After thinking it over, Elizabeth-Jane is convinced. Meanwhile, Michael finds Susan's letter and reads it. The letter reveals that Michael's own daughter died, and this Elizabeth-Jane is the child of the sailor Newson. The discovery shocks and angers Michael, and he becomes mean to Elizabeth-Jane without telling her the truth.
Elizabeth-Jane is confused, but tries to win the love of Michael by immersing herself in her studies. She also visits her mother's grave. One day she meets a wealthy and charming young woman at Susan's grave, and she pours out her story to the woman. The lady, Miss Lucetta Templeman, says she will soon be living in Casterbridge, and she would like it if Elizabeth-Jane can be her house mate. Michael allows it despite him not liking the idea, and Elizabeth-Jane leaves that day.
Lucetta invites Michael to her home, even going so far as to send Elizabeth-Jane away on chores just to convince him to visit. Michael and Lucetta had an agreement long ago when he was in Jersey, but it had been put on hold because of his marriage. Now that Susan is dead, Lucetta wishes to renew the agreement. To her joy, a caller comes-but it is Farfrae coming to call on Elizabeth-Jane. Lucetta and Farfrae are instantly attracted to each other, and she begins to ignore Michael completely. While Michael tries to propose to Lucetta he doesn’t know of a rival. Elizabeth-Jane realizes that Farfrae and Michael are in love with Lucetta, and she starts to lose her love for Farfrae.
The competition between Farfrae and Michael extends into business, complicating the situation. Michael hires Joshua Jopp as his general manager, and orders Jopp to do all he can to force Farfrae out of business. Michael tries to base his grain purchase on the predictions of a weather-predictor, but the prediction is incorrect, and the bad investment drives Michael into debt. Whereas Farfrae buys wisely and gains money.
Despite his losses, Michael is still determined to marry Lucetta. After learning that Farfrae is the secret rival, Michael forces Lucetta to agree to marrying him or he will reveal their past relationship by using her earlier love letters. Lucetta reluctantly agrees. The next day, Michael hears the trial of an old woman. The old woman is the furmity seller from long ago, and she tells the story of the wife auction. Lucetta is so horrified that she runs away to Port-Bredy. There she marries Farfrae secretly, and she tells Michael a few days later.
Meanwhile, Michael has terrible luck in business. He makes another bad decision and goes bankrupt. Farfrae takes the opportunity to buy Michael's office and offer a job to Michael. Michael accepts, but feels hatred at Farfrae's success. After all, Farfrae is the popular choice for new mayor, and he has Lucetta. Michael looks forward to the ending of his oath not to drink liquor.
Elizabeth fears that Michael will hurt Farfrae, and the townspeople know all about Michael's hatred of Farfrae. Although Farfrae gives up the idea of giving Michael his own shop, he cannot leave Casterbridge because he is offered the position of mayor. Lucetta begs Michael to return her letters, and Michael pitying her, returns them.
Joshua Jopp meets Lucetta after her meeting with Michael. He asks her to help him get a position with Farfrae. Lucetta refuses. Michael gives Jopp a package to deliver to Lucetta, and Jopp reasons that they are love letters. He shares the letters with some poor townswomen who hate Lucetta. They plan to have a skimmity-ride through town the next night. When the effigies of Michael and Lucetta ride through town, Lucetta sees and is so shocked that she has a seizure that kills her.
The whole world has crashed around Michael, yet he still has the love of Elizabeth-Jane. Even this reconciliation is threatened by a surprise visit from Newson, whom everyone thought dead. Michael tells him that Elizabeth-Jane is dead, and the sailor accepting this, leaves. Although Michael and Elizabeth-Jane soon settle into a peaceful life, Michael constantly worries about Newson's return.
Meanwhile, Farfrae returns to Elizabeth-Jane. Michael is nervous about their love, and he becomes even more nervous when Elizabeth-Jane says she must meet someone. She meets Newson, who tells her the truth about her birth. At the wedding of Elizabeth-Jane and Farfrae, Michael comes to make up with his step-daughter, but he sees Newson and decides to never trouble Elizabeth-Jane again. Later, Elizabeth-Jane realizes that Michael wanted to make peace with her, and she sets out to find him. Abel Whittle, the man whom Michael wanted to punish once, cared for Michael in his last days. He tells Elizabeth-Jane that Michael is dead. Michael's last will states that no man should remember him. Elizabeth-Jane resolves to do as she is told, preferring to concentrate all her love on her husband and family.
