After spending the summer with his mother in Philadelphia, Dawson returns to Capeside and meets a beautiful, outgoing, young woman, named Eve, on the bus from Philadelphia. Eve soon brings trouble to Dawson's ho-hum life when he accidentally wrecks his father's boat during an outing with her and tries to come up with $3,000 to repair it before Mitch finds out. So, Eve helps out by throwing a rave party at the Leery house with strippers from the club she works at. Meanwhile, Joey, who has frozen Dawson out all summer for forcing her to rat out her father, realizes that she still has feelings for him again when they meet during the first day back at Capeside High as juniors. While working at the Capeside Marina, Joey deals with the come-ons from her sexist boss Rob Logan. Jen gets more than she bargained for when she tries out for Capeside High's cheer leading squad and faces off in a war-of-wits against the mean-spirited head cheerleader, and acquires her position. Also, Mitch gets a new job as Capeside High's varsity football coach, and a new charismatic, but very stern, principal, named Howard Green, arrives to administrate the school.

Dawson is recruited by Mitch and Principal Green to produce a film for the football pep rally, while the mysterious Eve continues to temp Dawson. Meanwhile, Pacey enlists Joey's help for help in bringing Andie back to Capeside. But Pacey's and Andie's long-awaited reunion doesn't go exactly as Pacey intended when a guilt-ridden Andie tells him about a fling she had of her own and as a result, Pacey breaks up with her. Also, Jack is asked to join the football team, the Capeside Minutemen, and then comes to an unexpected understanding with his father who has returned to Capeside after moving his struggling business to live near Jack and Andie. Also, head cheerleader Jen has a meeting of minds with the new Capeside quarterback; the rookie freshman Henry Parker.

Dawson is stunned when Eve presents him with stolen copies of the school's PSAT's and everyone is tempted to cheat, including Joey whose scholarship to Harvard is dependent on her SAT scores. But when the test goes missing, Dawson wonders who stole it and accusations run high, especially with Pacey. Meanwhile, Jack feels that the whole football team is verbally and physically beating down on him because he is gay, while Henry Parker asks Jack for advice on talking to Jen. Also, Rob Logan continues to make Joey's life difficult at work after she turns down an offer to go on a date with him.

Mitch and Dawson are at odds with each other again when Dawson moves forward with a news piece for his mother's Philadelphia station using Mitch's star player, Jack, as his subject matter, even though Mitch is vehemently opposed to it. Meanwhile, Joey and Pacey find themselves in cahoots when they must pay the price for ditching school for the day so Pacey can work on a 'dream boat' he plans to sail around the world in, while Andie panics and jumps to conclusions when Principal Green wants to meet with her after school after mistakenly thinking that he knows about her cheating on the PSAT's. Also, Jen goes to great lengths to remove herself as head cheerleader due to the stress of being in that position, but is shocked at the end results which involve the painfully shy Henry Parker.

Jen reveals an important decision she's made with regards to college while Jack and Grams make a decision on their own for her. When Dawson comes up empty with answers to an important question on his college essay on registration for USC Film School, he turns to Mr. Brooks for inspiration and learns that Mr. Brooks' life in Hollywood eerily parallels Dawson's own life when Mr. Brooks left the filmmaking business after his best friend and girlfriend got together. Meanwhile, Pacey accompanies Joey to a formal party at the Yacht Club for prospective Worthington College students where the visiting dean, Walter Kubelik is impressed... with Pacey. Also, Gretchen takes over planning for Gail and Mitch's Christmas party at the restaurant where Mr. Brooks has a meeting of minds with Grams Ryan.