A rainy Thanksgiving brings uneasy get togetherness when Brandon brings over Jack Canner, the homeless man he tried to help out the previous summer, after Nikki leaves town to visit her parents in San Francisco. Meanwhile, Steve, now expelled from school, joins his mother for a TV shoot in Santa Barbara to some time break his bad news to her. But Samantha Sanders actually sticks up for Steve and gets him conditionally readmitted to West Beverly. Also, Dylan brings his father home for Thanksgiving and must cope with his presence and his new girlfriend Christine.

Dylan's father, Jack, is finally released from prison to enjoy his son's company, and sets eyes on his trust fund. David doesn't know where he will live after his father moves out of Jackie's house. Meanwhile, Brandon's addiction to gambling intensifies when he starts using his own college money. Andrea decides on a new look for herself by her hair dying it red and trading her eyeglasses for contact lenses. But other than Donna, no one seems to notice Andrea's make over. Also, Dylan finally chooses Kelly over Brenda who is worsened after they tell her about their summer fling they had while she was in Paris.

After dissolving the trust fund, Dylan, Jack and Christine enjoy the good life together on a friend's yacht at Marina del Rey. But they are all under observation by unidentified men. Meanwhile, finances force Kelly's mother to put their house up for sale. Brenda, Donna and Cindy take a class in self-defense. Brandon continues gambling and starts losing money totaling $500 which makes Duke rather angry, but lets Brandon slide his losses. Andrea get invited on a date with Jordan. Also, David meets with Serge Menkin, his new recording manager, who insists that David record some different rhythm tracks.

After Jack is killed in a mob-related car-bombing, Dylan struggles with his inner self urging him back to old drinking habits before he learns the shocking truth about his father's parole and true colors from Christine who revealed to be FBI agent. Meanwhile, Kelly continues to be obsessed with losing weight and begins starving herself, while she becomes uncomfortable when Jim asks Dylan to stay at the Walsh house for a while to avoid reporters following his every move. Steve turns down giving any more recording advice to David who struggles with meeting with Curtis Bray and Serge Menkin for a recording session on the day of Jack McKay's funeral. Also, Brandon's losing streak continues as his betting continues.

Donna's snobbish mother, Felice, puts Ray's feelings for her daughter to a test by offering him money to stop seeing her, while Ray's alcoholic, chain-smoking, redneck mother, LuAnn, goes Christmas shopping with Donna. Differing family traditions cause tension between the Catholic Jesse and the Jewish Andrea. Clare introduces David to her father during a faculty Christmas party who finds common ground with him over their love of music. Meanwhile, Dylan goes to his old friend, Christine Pettit, from the FBI to help him find his stolen money. Unable to help Dylan, Christine then contacts an alcoholic, former FBI agent-turned-bounty hunter/private investigator, named Jay J. Jones (Jonesy), who contacts Dylan on Christmas Day and offers to track down his money in exchange for getting a full share of it. Brandon is left alone to care for the recovering Kelly when Jim and Cindy leave town to visit Brenda in England and Valerie leaves to visit her mother in Buffalo. Also, Nat hosts a special holiday feed-the-homeless dinner at the Peach Pit.

In Palm Springs, Brandon reacts coldly to Kelly after mistakenly thinking that she and Allison are more than friends; he considers surrendering to Valerie's advances toward him. Things get even worse for Brandon after he's arrested for driving Valerie's car when he's pulled over by a traffic policeman, who finds Valerie's marijuana stash in it. Meanwhile, Steve finally learns Elle's secret of being "more than a woman." Donna decides to give the possessive Ray a second chance, and rudely blows off Valerie, revealing she's figured out that Valerie seduced Ray. Also, Tom Rose and his thugs threaten Dylan with death when they catch him phoning agent Christine Pettit to make a background check of Mr. Rose, for they know something about Dylan's father's murder. This prompts Dylan to terminate his partnership with Charlie and return to Beverly Hills, determined more than ever to find the mobster who ordered his father's killing.

Dylan becomes intrigued with his past after he and Steve see a live news report showing a group of plane crash survivors, one of whom is the dead-splitting image of his long death father Jack McKay. Dylan tries looking into his family storage locker, but finds it broken into and ransacked. Dylan then goes to see Christine Pettie, the FBI agent who was involved in protecting his father many years ago, but she is not very helpful and advises Dylan to leave this alone. Meanwhile, Noah's return to drinking gets worse when he intrudes on Donna's newest date Eli. Kelly compromises her personal feelings for her new profession when her first PR assignment is to cover gay teen groups in schools. Also, David ponders his further relationship with Camille when the issue of how to satisfy her arises during their first night together, while Donna hires Camille to work at the boutique.

Jack McKay suddenly shows up at Dylan's front door of his hotel room where he makes him an offer to be a part of his life in which he will leave the witness protection program that he is in. But Dylan is approached by Christine Pettit who warns Dylan about a rash decision that his father is making since he is still a marked man by his former mob partners. So, Dylan tells Jack to go back to his new life in Arizona while he deals with his own. Meanwhile, Steve lobbies for Ryan's return to college who falls under the influence of Noah in bar-tending at the After Dark. David interviews for a radio job in New York City while Donna and Camille worry about this turn of events. Also, Matt reopens his practice after his suspension and his first client is a stand-up comic named Stuart Patton who's jokes are funny only to Matt.