The village of Sleepy Hollow is getting ready to greet the new schoolteacher, Ichabod Crane, who is coming from New York. Crane has already heard of the village's legendary ghost, a headless horseman who is said to be searching for the head that he lost in battle. The schoolteacher has barely arrived when he begins to pursue the beautiful young heiress Katrina Van Tassel, angering Abraham Van Brunt, who is courting her. Crane's harsh, small-minded approach to teaching also turns some of the villagers against him. Soon there many who would like to see him leave the village altogether.

Country girl Annabel Lee has big dreams of being a famous artist. Her widowed mother encourages her to go to the city so she can study. Annabel works hard, but she sells only one painting. She discovers that a renowned artist is spending the summer at a nearby resort, so she sends him her best work for a critique. A friend recommends that she see him in person, so Annabel pawns a piece of jewelry and heads for the resort. The artist informs her that she doesn't have enough talent to achieve much.

Young Doris Kane suspects that her fiance, Paul Evans, doesn't love her anymore. She finds out that he is now infatuated with a "vamp", Jeanne DuPre. Paul's father is appalled at his son's behavior, and devises a plan to break up the romance between his son and the vamp by making her fall for him and exposing her perfidy to his son.

Genevieve arrives at the Hubbard farm in New York State in a chauffeur-driven limousine, bringing along her maid, her pet dog, and custom-made silk overalls modeled after Russian ballet attire. She eventually adapts to the labor and falls in love with Bob Hubbard, the farmer's youngest son. However, when Bob enters an army training camp, he finds military life distasteful and goes AWOL to return home. Genevieve successfully persuades Bob to return to his post and fulfill his duty. Though their initial secret meeting leads to Genevieve being sent away by the elder Hubbard, Bob eventually obtains a leave of absence to clear her name. He becomes a resolute soldier, and the two resolve to marry once the war is over.

George Farrelly, the bored custodian of the safe-deposit vaults in a New York bank, is visited by his childhood sweetheart, Charity Garvice, who tells him that his blind old teacher, Martha Owen, has a premonition that something is wrong in George's life.