Nominated for Capeside's Homecoming Queen, Jen wins and is put in charge of planning the Annual Homecoming Queen Gala, where she shocks the prim-and-proper committee president, Constance Freckling, and the entire town with the entertainment, while Jen also asks the painfully sky Henry to be her date. After Joey and Pacey save Andie from the libidos Rob, she wants to get back together with Pacey. But Joey becomes suspicious that Andie may have orchestrated the event to make Pacey her savior. Meanwhile, Dawson is distressed with his mother, Gail, unexpectedly returns from Philadelphia, and soon learns that she was fired from her job, while he is torn about telling Jen the scandalous secret he has about the departed Eve.

Dawson makes the radical move of dropping out of film class to spend some time re-evaluating his teenage years against Nikki's advice. Meanwhile, Joey is torn between attending Pacey's opening night and her date with A.J., who has come to Capeside for the day. Before opening night of the school play of 'Barefoot in the Park', Andie must take over as director when the faculty director, Mr. Broderick, becomes ill and she tries to persuade Pacey to act out his feelings when he gets stage fright. Also, Jen agrees to go out on a date with Henry by taking him out to see the play. But she throws him another block by bringing Grams with her.

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.