When Walter gets up and goes to breakfast the next morning, his first at Limmeridge House, he is surprised to be greeted by a woman who he at first expects to find attractive when he sees her from behind. However, when she turns around he is repelled by her heavy, masculine features. The woman introduces herself as Marian Halcombe, and she proceeds to explain the relationship between the individuals living at Limmeridge House. Marian and Laura Fairlie are half-sisters, and both orphans; they had the same mother. Mr. Frederick Fairlie is Laura's paternal uncle, the younger brother of her father. He inherited the property and became Laura's guardian after her father's death. Mr. Fairlie is unmarried, and quite frail and sickly. The only companion Marian and Laura have other than each other is Laura's former governess, Mrs. Vesey. It will be Walter's job to give them both art lessons.
Walter explains his encounter with the woman in white to Marian, asking her if she is any idea who the woman could be, since she seems to have known Marian and Laura's mother well. Marian has no idea who she could be, but suggests that she will try to investigate by looking through the letters her mother wrote during her lifetime. She also suggests that Walter not tell either Laura or Mr. Fairlie about the encounter, since they are both sensitive and easily agitated. Walter then has his first meeting with Mr. Frederick Fairlie. Mr. Fairlie loves to surround himself with art and beautiful things, but he is very sensitive and anxious and requires a lot of coddling. He also shows no interest in the type of instruction his nieces will receive, and Walter finds his spoiled and selfish nature to be distasteful. Walter's introduction to the household continues: Mrs. Vesey strikes him as placid and mild-mannered, but he is immediately smitten with the beauty and delicacy of Laura Fairlie.
That very evening, Marian takes him aside to share the information she has been able to gather from Mrs. Fairlie's letters. In a letter dated about 11 years prior, Mrs. Fairlie describes how one of the village women, Mrs. Kempe, was ill and dying. Mrs. Kempe's sister, Mrs. Catherick, arrived to nurse her, accompanied by her 11-year-old daughter Anne. Since Mrs. Catherick would be very preoccupied with nursing her sister, she entrusted Anne to Mrs. Fairlie's care. Anne was considered intellectually slow, but seems to have become strongly attached to Mrs. Fairlie. For example, after Mrs. Fairlie suggested that white clothes suit her, little Anne vowed to only wear white in the future. Mrs. Fairlie was also struck by a strong resemblance between Anne and her own daughter Laura. As Walter hears all of this, he realizes that the woman he encountered did look a lot like Laura Fairlie, leaving him persuaded that the woman in white must have been Anne Catherick.
After this conversation, Walter and Marian discreetly ask Laura if she remembers anything about Anne Catherick, but while she does remember briefly meeting the young girl, she has no idea what became of her after Anne and her mother left Cumberland. Meanwhile, as time passes, Walter begins to fall in love with Laura, and also becomes increasingly convinced that she shares his feelings. Three months into his contract, Marian takes him aside to tell him that she knows he is in love with Laura. She also tells him that Laura shares his feelings, but that Walter must cut off the blossoming relationship by leaving the house immediately. She makes it clear that she doesn't object to Walter's class position: her concern is rather that Laura Fairlie is already engaged.
Marian tells Walter it is important that he leaves as soon as possible, since Laura's fiancee will be arriving at the house within days. The engagement was set up by her father prior to his death, and Laura was neither happy nor unhappy about it, but Marian is concerned that her growing feelings for Walter will lead to her becoming distressed. Marian advises Walter to tell Mr. Fairlie that he is urgently required to return to London, and will therefore have to leave before the end of his contract. Walter agrees to the plan with a heavy heart, reluctant both to part from Laura and worried he will disappoint his family with his abrupt return. He also asks Marian who Laura's fiancee is, and is alarmed to learn that Laura is engaged to a man named Sir Percival Glyde, a Baronet from Hampshire. This news is worrying to him since he recalls that Anne Catherick said she was from Hampshire, and that there seemed to be a Baronet she was afraid of.
As Walter encounters the family at Limmeridge House, questions of gender and androgyny quickly become apparent. In the Victorian era, there were clearly defined ideals of masculinity and femininity in behavior and appearance. Laura Fairlie perfectly embodies the ideal Victorian upper class woman, with her beauty, fragility, delicacy and modesty. Walter's attraction to her contrasts with his ambivalent reaction to the woman in white; Laura would never overstep any social boundary in her behavior, and he can thus embrace his attraction to her. At the same time, the strong physical likeness between the two women suggests that they might be foils to one another, and that part of what is appealing about Laura is that she represents a socially sanctioned version of the woman in white's wildness.
Marian and Frederick Fairlie, on the other hand, both strongly challenge gender expectations. Marian is androgynous both in her physical appearance and her behavior. She appears quite masculine in her features, but is also clearly intelligent, competent, and action oriented. She is immediately willing to help Walter figure out the identity of the woman in white, and does so effectively. She also sees herself and Walter as sharing a common purpose in taking care of Laura and protecting her feelings. The decision not tell Laura about Walter's encounter with the woman in white marks the first of many times that Walter and Marian will work as a team, while assuming Laura is too frail to be involved.
Mr Frederick Fairlie likewise challenges ideas of what it means to be a man. He is preoccupied with beauty and art, but to a selfish degree, and fails to live up to his obligations as a guardian of two young women and the head of a large estate. He wants to live a lazy and pampered life, and is very easily overwhelmed. Frederick functions as a kind of comedic caricature of the spoiled and lazy Victorian aristocrat, and contrasts directly with Walter's bravery, vigor, and chivalry. Since Frederick is unmarried and represented as quite effeminate, there is also the possibility of him being interpreted as a negative stereotype of a gay man.
When Marian decides to try and find out who the woman in white could be, we see the first of many investigations take place in the novel. She clearly has good skills for doing detective work, since she comes up with a plausible method for uncovering information, and is then meticulous and thorough in going through her mother's letters. This shows Marian's intelligence and ingenuity. It is also significant that written documents hold the key to identifying the woman in white as Anne Catherick. Throughout the novel, written records will often be shown as the way to either document and uncover a truth, or to conceal it.
Walter and Laura's love for one another is ill-starred for many reasons. The most obvious, and the one Walter is most aware of, is the social gap between them. Laura is wealthier and higher-ranking, and it would be considered extremely inappropriate for her to marry a non-aristocratic man. This expectation becomes ironic, however, in that both Frederick Fairlie and the mysterious Baronet do not seem to be positive figures. Marian, surprisingly and unconventionally, makes it clear that she doesn't object to Walter's social status, but that she knows the relationship will become a source of pain to Laura due to her pre-existing engagement. The engagement is important because it shows the lack of control Victorian women often had over their marriages. Laura's father wanted her to marry Percival Glyde, and now she feels obligated to do so, even though she feels no attachment to him on a personal level.