Joey is in her 2nd month at Worthington University where she is struggling in her beginners writing class taught by Professor David Wilder who criticizes her first essay about her and Dawson. Audrey Liddell, Joey's brash new roommate from Beverly Hills, proves to be more of an annoyance than a friend with her wild and crazy personality. Dawson, who's continuing his studies at USC with an internship in Hollywood, begins his job on a shaky start when he meets Todd Carr, an arrogant, egocentric, hack film director who gives Dawson a hard time. Meanwhile, Jen pays Pacey a visit, who's lying low as he docks his yacht in Boston Harbor after sailing away the summer. At nearby Boston Bay College, Jen and Jack are invited to their first fraternity party. They persuade Joey to come along with Audrey who seems to get along with Jen and Jack, much to Joey's surprise. Also, Jen meets Charlie, a bass player. She is rude to him, insulting him away, but deep inside feels strongly attracted to him.

After arriving in Boston to visit, Dawson sees great complications in his past relationship with Joey, who decides to drop out of Professor Wilder's writing class. But the line is incredibly long, which takes Joey all day and all the time she had to spend with Dawson, who ends up being guided around the campus by Audrey whom he confides in with his problems. Meanwhile, Jack pushes Jen into talking to Charlie, who works as the campus radio DJ, and after their first date, she ends up sleeping with him. Also, Doug pays Pacey a visit at the Boston docks and tells him about a job he can get for him at a restaurant, called Civilization, in which the chief, Danny Brecher, is a friend of Doug's. Reluctant at first, Pacey eventually gives in and gets the job after his latest girlfriend, Melanie, is forced to pay for their evening out since Pacey has no job or money.

With Dawson still staying in Capeside, Joey tries to get his mind off his father in which they end up going to Professor Wilder's book party where Dawson has an emotional twist which makes him storm out of the party. Meanwhile, Jen sees Charlie with another girl and makes a scene out of it, but turns out it was his sister. Embarrassed, she decides to make up for it and bring him a fruit basket, and catches him kissing another girl. Tobey makes a surprise visit for Jack, who gives more attention to his fraternity brothers and he ends up breaking Tobey's heart. Also, Pacey still tries to establish a good working environment with Karen and learns that his boss, Danny, is cheating on his wife by meeting a mystery woman aboard his boat.

Jen helps Dawson go back to the psychiatrist, Dr. Rachel Weir, whom he ran away from. Dawson still thinks that the whole idea of sharing his thoughts with a complete stranger is weird, but he is surprised with how much he learns from it. Back home in Capeside, Dawson has to handle the problem with his father's will, which does not include baby Lily. Meanwhile, Joey is working on a project with Professor Wilder about old love letters written by an obscure writer, and with a little help of Audrey's audition videotape for "The Real World: Ibiza," she manages to catch something not one of the fellow students caught. Also, Pacey confronts Karen about the risks she is taking for having an affair with Danny, but she refuses to listen to him. Later, Karen is hurt when Danny's wife shows up at a dinner party the restaurant holds, and he completely blows Karen off.

Joey and Audrey go out to a nightclub to celebrate both Joey's straight-A grades and the winter break from school. Charlie is also there and he hits on Joey, who turns him down for what he did to Jen. But Charlie doesn't give up so easily and dares Joey to do something wild in which she accepts a dare to go on stage to sing with his band. Meanwhile, Pacey sees himself hanging out with Audrey after he joins her and Joey at the club to celebrate his new promotion when Danny makes Pacey the assistant chef at restaurant Civilization. Also, Dawson and Jen go back to Capeside to visit his mother where they have their first fight over what Dawson will do with his life.

Dawson and Jen realize that living together isn't as fun as they thought it would be; Jen turns her regular show at work into an advice show.

Dawson accepts the job of directing the slightly annoying Oliver's film; Joey's night takes an unexpected turn when she finds herself kissing Professor Wilder.

Dawson begins directing Oliver's movie with Oliver playing the lead where Dawson has to deal with Audrey (who took the leading female part) as well as her complaints about Oliver's kissing skills. When Dawson discovers that Oliver has no talent in acting, he must recast the male lead role within the day and Jen comes up with the most unlikely candidate: Charlie. During the filming, Audrey has a crisis and locks herself in the bathroom because she kissed Pacey and felt like she was betraying Joey. Meanwhile, Joey feels conflicted over where to go on with her situation with Professor Wilder, but is called away from him at his out to help out with Oliver and Dawson's film to help Audrey get back on the set so they can finally finish the shooting. Also, Jack is fed up with his frat brothers after the homophobic Eric accuses Jack of making a pass at him in which Jack moves out of the frat house.

Professor Wilder ends whatever romance he had with Joey, and refuses to listen to an explanation of why she stood him up the night before by saying it was for the best. Joey is shocked, but not as much as when she spots him at the movies with another woman during an outing with Dawson. Meanwhile, Jen has to interview a band for her radio show, but things aren't as easy as she hoped when she has to fight flirtation at all costs with one of the members of the band, while Audrey does the same with another member. After Audrey refuses to give her growing relationship with Pacey another chance, he goes out with Jack to a gay bar where Jack shows Pacey an inside look at what it feels like being a woman.

With the end of the semester, Joey and Audrey pack their things and move out of their dorm room. Professor Wilder also says goodbye to Joey before he tells her that he has decided to leave Worthington to try writing novels again. In Capeside, while Audrey hangs out with Dawson, Joey decides to visit her dad in prison, only to find out he was released on parole four months ago. Meanwhile, Dawson receives a phone call from their agent saying that some big producer in Hollywood wants to make something out of their film. But Dawson doesn't know how to break the news to Oliver, whom he has barely spoken since their trip to New York. Alex is still ruling the Civilization like the devil-in-person and fires a waitress. Fed up with Alex, Pacey takes the opportunity of a meeting with investment executives to protest her employment tactics, which pushes her over the edge. Also, Jen and Jack decide to take an adventurous vacation in Costa Rica, but Grams tells Jen that her parents have invited her to spend summer at their new beach house.