Leslie continues to race with the boys at recess every day, and she wins every time. Jesse has resigned himself to the fact that he will never be the best runner in the fifth grade. The other boys, unhappy at the direction their traditional activity has taken, begin to drift off to other pursuits. By Friday of the first week of school, it is clear that the races have come to an end.

Jesse's only consolation is the fact that Friday is music day, and Miss Edmunds is back. Miss Edmunds actually singles him out in the morning. She asks him if he has kept up his drawing over the summer and expresses a desire to see his work. During music class, Miss Edmunds sings a song called “Free to Be You and Me,” and by the time she is on the final chorus the whole fifth grade has joined in. Jesse, “caught in the pure delight of it,” looks over and smiles at Leslie. She smiles back and knows that he is no longer angry about what happened to the races.

On the bus, Leslie sits with Jesse and May Belle and tells them about Arlington and the “huge suburban school” she used to attend, with all its amenities. She acknowledges that she had a lot of friends there, and that her adjustment at Lark Creek Elementary has been hard. Leslie’s parents, who are both writers, have moved to the country because they “are reassessing their value structure,” having decided that they are “too hooked on money and success.” Although the decision to move was made by all of them, relocating has been hardest on Leslie, but she accepts what is happening without bitterness or complaint.

At school, the students in the fifth grade are assigned to write an essay about their favorite hobbies, and Mrs. Myers reads Leslie’s composition about scuba diving aloud to the class. She is insensitive to the fact that by singling her out with such glowing admiration, she is making it even more difficult for Leslie to fit in. After reading Leslie’s essay, Mrs. Myers assigns the class to watch something on television for homework. When Leslie reveals that she cannot do the assignment because her family does not own a television, she is again subjected to the disbelief and contempt of her classmates. At recess, Leslie is harassed further by the girls in her class. Boarding the bus that afternoon, she feels completely demoralized and goes straight to the corner of the long bench in the rear of the bus, unaware that it is the territory of the seventh graders. Jesse knows what will happen if Leslie is there when the older students arrive, so he rushes back and grabs her, dragging her past Janice Avery, the most notorious of the seventh-grade bullies. As he passes her, he utters an insulting comment that momentarily makes Janice the focus of the bus crowd’s derisive laughter. Leslie, awed by Jesse’s daring on her behalf, suggests that they do something fun when they get home. After she dispatches May Belle with a new set of paper dolls, she and Jesse run over to the dry creek bed that separates the farmland from the woods behind the old Perkins place.

Jesse and Leslie find a rope someone has left hanging from an old crab apple tree and take turns swinging across the gully on it. Leslie, who is well-read and has a vivid imagination, proposes that they find a secret place, just for the two of them, where they could be the rulers and no one would “come and mess it up.” They decide to build a castle stronghold in the woods on the other side of the gully, to be entered only by swinging over on the “enchanted rope.” The land would be called Terabithia, and there, in the “shadowy light of the stronghold, everything seems possible” and nothing can ever defeat them.

A few days later, Janice Avery falls in the aisle of the school bus and accuses Jesse of tripping her. The driver kicks Jesse off the bus, and he must walk the three miles home. When he arrives at Terabithia, Leslie is waiting for him, fuming about Janice Avery. Although Jesse says he does not mind having been kicked off the bus, Leslie says that people like Janice must be stopped or else “they turn into tyrants and dictators.”

Although they are teased about their deepening friendship, Jesse and Leslie begin spending time together at school. Gary Fulcher mocks Jesse for having a girlfriend, but Jesse knows that his relationship with Leslie is something much more noble than what Gary insinuates. Jesse meets Leslie’s parents. Although they are very nice to him, he is not comfortable with them. Their lifestyle is very different from what Jesse is accustomed to, and their intellectual conversations about politics or saving the whales make him feel dumb. Jesse does not like to bring Leslie over to his house either, where his older sisters make lewd remarks, his younger sisters are annoying, his mother makes critical comments about Leslie’s clothes and hair, and his father worries that his son spends so much time playing with girls.

Terabithia remains a haven for both children, a place that is exciting and full of wonder. Behind the castle stronghold is a pine forest, where the trees are so thick that the sun barely shines through them. Jesse is at first afraid of the eerie stillness there, but Leslie shows him that the forest possesses a benevolent magic. It is not an ordinary place but is sacred, and even the rulers of Terabithia “come there only in times of greatest sorrow or of greatest joy.”