Ivo's father returns to the island from which he was banished. Being sickly, the father wanted to see his home and son one more time. He soon passes, leaving behind, in memory, an old and decaying sailboat called the Blue Seagull.
Ivo decides to rebuild the old sailboat and needing help, he recruited some of the younger kids on the island. They also needed money and the entire crew was able to work in the quarry, in spite of a close call with a huge rock.
Fisherman seized the Blue Seagull over a debt supposedly owed by Ivo's late father. Through trickery they retook the boat, but a storm took them to another island. Finding water, a smuggler's cave was discovered with all knds of loot.
Seeing the crew of the Blue Seagull looking at their loot, the smugglers seized the crew and locked them in the hold of their boat. They were able to escape, however, taking off in the smuggler's boat, leaving the smugglers at the cave.
Through one of the smugglers, Ivo learned the truth about how his father was set up and now Ivo must prove this to the islanders. Meanwhile, the other smugglers showed up with the intention of taking back their boat but failed.
The Blue Seagull goes fishing. Their ex-smuggler/friend felt they can do this on their own but was assaulted by the other smugglers until the crew came to his rescue. Back on the boat, their friend was shot to death and was buried at sea.
Without their friend another attempt was made by the smugglers in getting back their boat. Seeing them on shore planning, some of the crew was able to sneak around them on shore and again another failure by the smugglers.
The smugglers succeeded in getting their boat back. However, the naval guard was notified about them and was able to capture them and the boat was returned to the crew this time for good, with the crew coming home to a warm welcome.