During the summer, Pacey and Audrey rocked Los Angeles and spent time with her next door neighbors, the Osbournes, and Jack Osbourne even tags along with them to interview at Worthington. Jen spent her time in New York and got ecstatic to learn her parents are separating. Jack got dumped by Eric, but got over it. Joey spent her summer in Capeside doing a lot of reading, working and romancing. On their first week back at Boston Bay College, Jen is shocked to run into find that Grams Ryan has decided to go back to school. At Worthington, Joey experiences nothing but bad luck when she decides to enroll in an intermediate writing class taught by the liberal, but manipulative and cynical, Professor Greg Heston who does not hesitate to ridicule and embarrass Joey in front of the class with her lack of knowledge of the current book topic. Pacey and Jack move out of Grams' house and Pacey tries to get the perfect apartment, owned by a feisty, punk rock British woman, named Emma Jones, who works as a waitress in the local bar Hell's Kitchen. Also, Dawson is working on a new movie, a horror film titled "Wicked Dead" with him as the assistant director and the hack Todd Carr as director. When he finally gets together with Joey, he is the only one to have remembered her 20th birthday.

During a typical five-day work week, Joey is incessantly trying to reach Eddie while dealing with Harley Hetson showing up at Hell's Kitchen every day after cutting school. When Harley persuades Joey to see Eddie, she is devastated after finding out that Eddie has moved out of his apartment without saying a word. But Joey manages to persuade Harley to behave like an adult, and she also finally stands up to the intimidating Professor Hetson to help him look after Harley once in a while. Meanwhile, Pacey begins skipping work by hanging out at the Boston Aquarium with Emma. But any romance between Pacey and Emma is quashed when Rich Rinaldi buries Pacey with more paperwork, making him miss his lunch date at the aquarium with Emma. Jen starts working as a peer counselor with C.J., but her personal interests get in the way of her work. Jack and David both get tested for HIV which leads to them talking about their sexual pasts. Dawson and Todd fly to Los Angeles after photography on Todd's movie, "Wicked Dead" finally wraps up. But Heather Tracy and the executive producer, Larry Newman, want Todd to re-shoot the entire ending. After Todd refuses, due to his pride and ego, he gets fired and Dawson is ordered to step in as director. Also in L.A., Audrey goes back to her roots by hanging out with her party-loving friend Jack Osbourne.

Pacey, now jobless and penniless, returns to Capeside where Dawson invites him to be a producer on his autobiographical film. Pacey accepts, but can't work up the courage to tell Dawson that all his money is gone. With classes at Worthington over, Joey says goodbye to Audrey who has to stay behind to attend summer classes to make up for her absences, with Jack Osbourne tagging along. Joey also returns to Capeside to see Dawson where they have minor argument with about how she wanted him to be the most significant person in her life and somehow he became her only one night stand. Back in Boston, Jen invites her mother, Helen, over to Grams' house where she wants her to tell Helen about her cancer. While introducing C.J. to Helen, Jen witnesses C.J.'s Uncle Bill storm into the house and yell at Grams, revealing everything by saying that she shouldn't give up on her life just because she has cancer. Jen suggests that they all move to New York to live with Helen. Also, Audrey decides on a low-key change for herself by playing an old-fashion acoustic guitar at Hell's Kitchen, and Pacey finally tells Dawson about losing all his money in his poor stock investments.