When Bessie takes a weekend getaway, Joey's hoping to get some studying done. But between her responsibilities at the B&B and Pacey's affections, Joey's hard pressed to find a moment alone to study for an English exam, and as if that wasn't enough, she's trying to cope with her feelings about having seen Dawson kiss Gretchen the other night at the Christmas party. Pacey's got his own issues with that 'kiss' and he's convinced Dawson and Joey need closure, once and for all. Meanwhile, Dawson's collaboration with A.I. Brooks on a documentary on his life story begins, which rejuvenates Dawson's filmmaking spirit and learns more about Mr. Brooks, whom never got over his best friend stealing away his girlfriend. Also, Jen takes Jack to a "Gay-Straight Coalition" meeting in the hopes that he'll meet some gay friends. But Jen seems to fit in with the crowd more than Jack does, who meets the militant founder Tobey.

Joey decides to help throw a surprise 18th birthday party for Pacey at his parents house, not knowing about Pacey's 'birthday curse'. The party goes haywire from the start as Joey finally sees why Pacey hates his dysfunctional and annoying family so much; his domineering, drunkard father; his overbearing, delusional mother; and his divorced sister Kerry and her three children, make everyone feel uncomfortable, and Doug later joins in and gets them to embarrass Pacey with stories from his past. Meanwhile, Dawson becomes upset when he feels that Gretchen doesn't want anyone to know about their growing romantic relationship and postpones their first real date to go to the party. Also, Jen is paired with Tobey for a community service project that evening of being the town's designated driver for drunken college kids.

Mrs. Valentine forces Joey to go on a double date with Pacey to accompany Drue and his wealthy, dim-witted, girlfriend, Anna Evans, to make sure that Drue behaves himself. Of course this isn't an easy thing to do when Joey starts to get concerned over the attention that Anna is bestowing on Pacey. Meanwhile, Dawson has his own problems when he and Gretchen go out with two of her college friends and he realizes the span in between their ages. Also, Jack finally gets some positive attention from Tobey when he asks Jack for help in teach reading to grade school kids, and Mr. Brooks becomes more weaker from his illness during the final completion on Dawson's documentary. Knowing that his days are numbered, Mr. Brooks tells Dawson to continue to follow his dream as a filmmaker and not let the love of his life (Joey) slip away, and end up like him: a bitter, misanthropic, lonely old man.

Gail throws a baby name shower to try and think for a name for the baby. But it's an experience that throws Joey for a loop when she realizes it's possible that she could be pregnant, and Pacey is nowhere to be found. After a series of false alarms, Gail finally goes into labor and forces the hesitant Mitch to take her to the hospital. While Dawson awaits the arrival of his new sibling, he and Gretchen wonder what their future holds when she considers an out-of-town job. Meanwhile, Jack faces an unexpected situation when he learns that Tobey has fallen victim to a vicious hate-crime and wants to keep it to himself.

As everyone gets ready for this year's senior prom which is held aboard a yacht cruising on the cape, some bad news causes Gretchen to reflect on her life, and Joey worries about Pacey's odd behavior. Meanwhile, Jen and Jack meddle in each others' lives resulting in some interesting prom dates with him being paired with Toby and she being paired with Drue. At the prom, Joey and Pacey confront once unspoken issues after a series of misfortunes incidents, in which Pacey loses his short temper and explodes at Joey saying that he will not be attending any college and resents the fact that she and everyone else is. The festivities cause conflict for Gretchen as she questions her relationship with Dawson after she tells him that she has decided to go back to college and thinks their relationship will not work out. Jen ends up getting drunk and nearly falls off the boat, but is saved by Drue who tells that despite his unwholesomeness, he does care about what happens to her, while only Jack and Tobey are the sole happy couple among their circle of friends.

As graduation day approaches, Joey has a tough time preparing her commencement speech, and Dawson helps her find some bittersweet inspiration. Pacey wonders if he's going to graduate at all and worries that his last final will be the toughest one. He walks out of it after his teacher makes a rude comment on him, costing him his diploma. Meanwhile, Andie McPhee returns to Capeside for the cap and gown ceremony, and is surprised to meet Jack's new boyfriend, Tobey. Pacey spends some quality time with Andie and decides he must get out of town to search for his feelings. After a friendly talk with Doug about his future, Pacey privately says his goodbyes to Doug, and then leaves town, vowing never to return. Also, Drue temporarily moves into Jen's house after being kicked out of his home by his mother after an argument. Drue then tells Jen that before they both graduate and go their separate ways to college, he convinces her to help him pull a hilarious senior prank for old times sake by setting off the school sprinkler system during the ceremony. But they get caught by Principal Peskin whom forces them to listen to his awful violin playing skills for three hours as their final detention of punishment.

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.