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.

Dawson goes back to Capeside to inform his parents of his decision to drop out of USC and stay in Boston. Mitch reprehends him and tells him he belongs in California, but Dawson's decision is made. Meanwhile, Jack is accepted on the Sigma Epsilon fraternity house and has doubts if he should go because they want him because he would be filling a quota of being a gay member. Joey finds Pacey working at the restaurant and goes pay him a visit on the boat where they have a nice conversation about their current lives. Pacey, bored of just peeling potatoes at the restaurant, has to put up with one waitress, named Karen Torres, and her bad mood in which he later finds out because he got the kitchen job she wanted. Also, Jen and Charlie try to go through 12 hours without sex so they can learn more about each other.

After Mitch suddenly dies in a car accident, Dawson has to handle the funeral arrangements where everybody comes to give him and Gail support as Dawson tries not to breakdown upon his father's sudden death. Gail, unlike Dawson, is not holding up very well and feels sorry for six-month-old Lily, who will never know how her father was like. Everybody, including Joey, Jen, Jack, Pacey and even Grams Ryan try to comfort Dawson in their own way, and Dawson starts to blame himself for his father's death.

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.

Dawson goes to Boston to see a shrink for his anxiety attacks. Instead of calling Joey right away, he decides to go party with Jack and his fraternity friends. Jen decides to get back at Charlie for cheating on her by teaming up with the other girl, Nora, to get revenge. Meanwhile, Audrey's overbearing mother, Kay, arrives from Califoria for a visit, and all she does is drive Audrey insane by judging her and making her feel bad. Joey sees herself caught up in the middle of the mother-daughter argument and makes an intervention in order to save her roommate. Also, Pacey discovers that the woman Danny has been cheating on is Karen when he recognizes a necklace she wears which was in Danny's possession.

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.

Dawson's therapist advises him to go to New Hampshire (where his documentary film of Arthur Brooks is being honored) and take a friend with him since he's been feeling so estranged from them. He takes Jen (who gets heartbroken after finding out that Charlie is trying to reconcile with his other girlfriend, Nora, and not her) and they pretend to be a couple, getting a very romantic honeymoon suite. Meanwhile, Jack brings Joey and Audrey to a frat party and Joey finds out they're only there for the fraternity brothers to score with them. Also, Pacey takes Karen on a non-romantic date and they accidentally sleep together, in which she reacts confused, quits her job, and hits the road.

After going to see a scary movie and feeling completely unsatisfied, Joey, Jack, and Pacey arrive at Grams' house and decide to tell some scary stories of their own. First off, Joey tells how she had a creepy encounter while studying alone at the library on Halloween night. She could have gone to a party with Audrey, who reminded her that a young female student was attacked there not too long ago. Next, Jack tells of how he was spooked while sorting through items in the frat house basement. Third, Pacey's story involves an unsettling run-in he and Karen had while driving on a quiet road one night. It seems a mysterious driver wouldn't be satisfied until he ran them off the road for good. Finally, Grams comes in and caps the night with what she promises to be the scariest story of them all. It involves Jen, the radio station, and someone (or is it something) that gives her a scare.

Pacey offers to cook for the gang on their weekly dinner at Grams house. Jen and Dawson return early and decide to keep their sexual encounter a secret, but they are caught by everyone making out at the door. The dinner goes on in a very awkward way for everyone as Audrey and Dawson worry about Joey, while Jack and Pacey worry about Jen. Charlie later drops by to talk to Jen, causing some tension for Dawson.

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.

In a cross-over continuation of the previous episode, set in real time during a cold winter night of a sudden snowstorm, Joey is robbed at gunpoint and forced to clean out her ATM account by a street mugger at a deserted area of Boston's Downtown Crossing district. But the robber ends up getting run over by a car in a hit-and-run accident, minutes after mugging Joey. Instead of calling the police, she stands by her aggressor, checking up on him and trying to get an ambulance to get him to the hospital after seeing the similarities between him and her own father, especially when Joey meets the guy's estranged wife Grace, and her young, tomboy daughter Sammy in the hospital waiting area.

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.

Charlie asks Joey to sing with his band at a distant biker bar club, which requires Pacey to give them a ride. Pacey and Charlie hate each other, and it takes a patient Audrey to keep them from going at each other's throats. At the bar, Joey is nervous and isn't well received by the rough audience, until Charlie helps her with a duet. They all end up for the night in a cheap motel where Joey begins to have feelings for Charlie, while Pacey and Audrey escape from their problems with sex. Meanwhile, Dawson, Jen, Jack and Grams drive up to Capeside for Lily's 1st birthday, and Dawson finds out his mother has a new significant other. Also, Jen confesses to Jack that she wants to break up with Dawson after feeling they are not right for each other, while Dawson is conflicted with the possibility of loving Joey again.

Oliver arranges a screening for their movie, which one of the guests turns out to be Amy Lloyd, movie critic for Boston Weekly, whom Oliver secretly invited for the screening and has a quarrel with Dawson. Meanwhile, Joey goes to Jen for advice on her feelings for Charlie, while Jen deals with Clifton Smalls, the new African-American boyfriend of Grams. Audrey tests Pacey's love for her by teasing him about the number of men she has had sex with. Also, Oliver decides to ask Jen out. She turns him down, but he plays her into being curious about him.

On Spring Break, the gang flies down to Florida to party at a beach house owned by Audrey's parents. Here, Audrey and Pacey go through their first relationship test when Audrey's old high school boyfriend, Chris, shows up with tickets for a concert where she is torn with the memories of the past and her present situation. Charlie unexpectedly shows up to try to spend some time with Joey, while Jen spends most of the week in bed suffering from a bad cold, and Jack spends his time getting drunk and refuses to talk about what's bothering him. Meanwhile, Dawson and Oliver are on the road driving towards New York to meet with a film agent who's interested in their movie Dawson spends the time telling Oliver his whole life story about him and Joey with hopes that there lies some reconciliation.

Charlie's band lands a deal for a tour and he asks Joey to go with him, but she doesn't want to leave college in the middle of the semester. Charlie then decides to quit the band and stay with her. But she breaks up with him so he can go with his band on tour. Meanwhile, Oliver and Dawson finally get to New York to meet with an agent. But Oliver ruins the meeting with his brazen obnoxiousness, and Dawson ends their partnership. Also, the restaurant Civilization is sold and an attractive, 30-something woman, named Alexandra 'Alex' Pearl, takes over as the new manager. She promotes Pacey as head chef, but fires Audrey and half the other employees. Pacey tries to get Audrey her job back, but all he gets is an inadvertent kiss from Alex.

Pacey's new boss, Alex, proposes more professionalism in the workplace. Audrey suspects something is going on between Pacey and Alex, leaving the future of their relationship unknown, while Pacey struggles with the growing attraction he feels for Alex. But when Alex shows up at Pacey's apartment and propositions him, Pacey learns that she is just a tease. Meanwhile, Dawson runs into Amy Lloyd, and they end up having sex at her apartment, where they talk about movies. She gives him an old Woody Allen movie and tells him that it's a gift. Dawson finds a movie she directed as a student and wants to see it, but she adamantly refuses. Also, Joey and Jack focus on studies, and while she has problems concentrating at the library, he has to catch up an entire semester and goes back to the fraternity house asking for help, but they refuse. Luckily, Eric shows up at Grams' house with the needed notes to help.

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.

Summer is upon the gang and so they move on with their lives to follow their own plans. Joey, back at Capeside, returns to her job as a waitress at the Yacht Club; Pacey gets a new job there as a security guard and runs into Danny Brecher whom has left his wife; Dawson and Audrey are on their way to L.A.; and Jack and Jen to Costa Rica. But a few things change everybody's plans when their flights are delayed. Bessie tells Joey they got an answer from the scholarship Joey thought of applying in France (which Bessie secretly sent in without Joey's knowledge). Also Grams decides to go to Las Vegas with Clifton. Jack meets Eric at the airport, who was just coming back from his hometown where he tried coming out to his parents. Jen tells Jack to go help Eric, as she'll go help herself by going to meet her parents.