Lyric discussion by rockboy52 

Cover art for Lady of the Island lyrics by Crosby, Stills & Nash

this song is all about Graham's romance with Joni Mitchell and is pretty much self-explanatory - probably is a description of their first , or certainly most memorable, romantic encounter - and his other song written for her is of course OurHouse

@rockboy52 that would be the obvious interpretation. But according to Steve Boone, the lady in question was John Sebastian's girlfriend from 1966-8 that Graham had an affair with, causing John to break up with her. CSN were staying at John's place in Sag Harbor at the time