The filming of Dawson's new movie brings back memories for both the filmmaker and for Joey, who grows to dislike Devon, the actress playing her, as well as Chris, who's playing Dawson. Meanwhile, Jen, now working as Dawson's producer, meets a new potential boyfriend for herself, Tyson 'Ty' Hicks, who is hired as a props man on Dawson's set, along with other Capeside High volunteers. Also, Pacey learns that Andie is bipolar after he finds antidepressants in her trash, which prompts her to believe that Pacey is more of an interference than a help in her life.

Capeside High is abuzz with the gossip mill after Jack bares his soul in an English assignment and is forced to explore his innermost secrets while reading a poem he wrote out loud in class, leaving Dawson, Joey and Andie shaken by the implications of what it all means: Jack happens to be gay. Meanwhile, Pacey tries to defend Jack in the face of his adversarial English teacher, Mr. Peterson, and ends up getting in trouble when he assaults the petulant Mr. Peterson which causes a riff between Pacey and Andie. Also, Jen finds Ty Hicks to be full of surprises.

On Dawson's advice, Joey attempts to heal the wounds of her romance with Jack which has been left shattered by rumors and innuendo. Meanwhile, Jack and Andie's father, Joseph McPhee, arrives in town for a get-together which brings out old family tensions which leads Jack confronting his innermost secrets. For the first time in his life, Pacey stands up for what he believes in when he takes on the mean-spirited Mr. Peterson. But the consequences of his convictions are more than Pacey could have imagined when he's suspended from school and Peterson makes his personal agenda to fail Pacey with unethical means. Pacey then sets out to ruin Mr. Peterson by investigating and challenging his authority with a code of conduct book over his teaching methods. Also, Jen thinks that Ty may not be the guy for her when she sees little amusement in his stereotypical comments especially over Jack's true sexual orientation, while Grams is surprisingly understanding and supportive.

On Dawson's 16th birthday, he, Pacey and Andie follow her therapist's advice and throw themselves into an unabashed night of recklessness where both Dawson and Andie get drunk at the jazz club and end up on stage singing the blues. Meanwhile at the Leery house, Joey is organizing a surprise party for Dawson. But the longer the guest of honor is a no-show, the more she is subject to surprises of her own. Abby and two of her girlfriends crash the party and taunt Jack over his recent 'coming-out.' Jen and Ty finally face up to their potentially irreconcilable differences in which they break up for good. Also, Gayle and Mitch come to decisions about how to raise their son in light of their divorce.