The day after their first true romantic kiss, Dawson and Joey both begin to have doubts about the future of their relationship as Joey forgoes her plans of going to France to be near Dawson. Meanwhile, Pacey decides on a new hairstyle look for himself and becomes chummy to the new girl in town: the neurotic, stuttering Andie McPhee, after they accidentally collide with each other in their cars. Pacey then asks Andie to help him get the attractive head cheerleader, named Christy Livingstone, to notice him. Following the death of her grandfather, Jen debates her own future after figuring out that Dawson and Joey are now a couple. Also, Mitch doubts the future of his marriage with Gayle when he goes to see a divorce lawyer.

Dawson gets in trouble with Joey when he reads an entry in her diary about her true feelings about his fantasy life of filmmaking. Meanwhile, Dawson is so self-involved with repairing his love life that he forgets Pacey's 16th birthday. As a result, Pacey, who also failed his drivers' ed test, decides to throw himself a pier party bash with a little help from Andie. Jack McPhee, Andie's older brother, gets a job at the Ice House restaurant which Bessie runs. Meanwhile, Abby Morgan begins to become a negative influence over the lonely Jen by taking her out carousing for guys and drinking. Also, Gayle confides in Grams, and Mitch with a friend, about their troubled marriage.

An economics class project pairs Dawson and Jen as husband and wife, as well as Pacey and Andie as a married couple. Jen, with a little of Abby's help, tries to take advantage of this project to get closer to Dawson, while Pacey gets to know a little more about Andie's background from Jack. While doing this project, Joey learns that as a single parent, she has a better chance of success in life, but does not see the same for Bessie who begins pressuring her to work harder at the Ice House. Also, Mitch and Gale's marriage continues to deteriorate to a point where neither one wants to be around the other.

Tamara Jacobs, the former Capeside High English teacher who left town to avoid a scandal after her affair with Pacey was almost exposed, shares an awkward reunion with him as she's temporarily back as a real estate agent, who is trying to sell Mitch a warehouse which he hopes to open his own restaurant. The encounters triggers old emotions in Pacey and curiosity in Andie who asks Dawson for advice on Pacey's likes and dislikes. Meanwhile, Joey finds a new joy in art and takes the time visiting a gallery with Jack who shares her newfound love, but Dawson does not have the same interests. Also, Abby tries to get Jen to help her flirt with an attractive seaman, named Vincent, who rejects Abby's over-played advances, but accepts Jen's more softer approach.

Emotions run high during the monthly night of the full moon when parental problems cast a pall over Dawson and Joey's new romance as Dawson finds himself stuck in the middle of Gail and Mitch's hostile feud over people they invite over; he with Miss Jacobs over the property and she with a new co-worker. Meanwhile, Pacey is troubled when he tries to meet Andie's elusive parents, and sees first-hand the home life that Andie avoids which involves her delusional mother unable to let go of Andie and Jack's older brother whom died the previous year. The rife between Jen and Abby increases as Jen invites Vincent over to her house for a date. Left alone to run the Ice House, Joey and Jack share a 'tender moment' during a power outage.

Dawson is rocked by two setbacks in his life. First he learns that Mitch and Gail have decided to separate. Then later at Capside's formal Homecoming dance, he learns about the kiss between Joey and Jack, setting off a chain of fireworks and events that shatter his lifelong friendship and newfound romance with Joey. At the same time, the night gives Jen a chance to use Joey's mistakes to try to get back together with Dawson, but it doesn't work. Also, Pacey tries to be honest with Andie, but ends up breaking her heart when he flirts with cheerleader Christy Livingstone.

Faced with a difficult English test, Dawson, Joey, Pacey, Jen, and Andi have an all-night studying session at Chris Wolfe's house. During this time, a purity quiz reveals the innermost secrets of all involved, including Pacey's fling with the departed Miss Jacobs, as well as Chris' motives to sleep with Jen, who reverts back to her promiscuous personality. The grouping also reveals the rage and jealousy in Dawson over his and Joey's failed relationship, in which he confides in Chris' younger sister, Dina, about his life problems.

After Dawson gets a $2,500 grant from the Boston Filmmaking Association following his win with his horror film, he asks Joey to help him work on his next film. But she refuses for she wants to have a life of her own. That evening, Joey's 'semi-date' with Jack for a moonlight picnic prompts a resentful Dawson to join Jen at a bash house party, thrown by Chris Wolfe, where she gets drunk once again and he ends up saving her from doing some things she'll regret. Meanwhile, Pacey proves his worth when Andie's mother has another psychotic breakdown during a study session at her house. Also, Mitch cannot understand Dawson's views on their divorce.

Andie decides to run for student body president and asks a reluctant Joey as her running mate. But Andie's run lands her on a campaign trail of tears when the devious Abby learns and begins advertising her dysfunctional family situation. Meanwhile, Jen helps Dawson take steps to deal with his powerlessness over his parent's divorce by taking him out on a delinquent spree of pranks as well as a moonlight swim in the nude. Also, Jack shuts out Joey for he does not want to talk about his family problems with her or anyone.

A series of 'horrifically epic' tryouts for his latest movie project, now involving a teen romance, prompt a steamy dialog between the two stars Chris and Abby, while director Dawson and producer Jen decide that they may have to recast Abby's role. Meanwhile, Jack poses in the nude for Joey for her art class' project sketch, who feels herself drawn towards intimacy. Also, Pacey sets out to fulfill Andie's dream date on his own with a romantic dinner, and a encounter in a hotel room.

Abby and Chris find an anonymous love note at school and set out to find who wrote it. Abby figures out that the author and intended recipient apparently had sex the night before and, in her true devious fashion, she sets out to expose the affair. The three suspect couples are: Dawson and Jen; Joey and Jack; Andie and Pacey. Abby and Chris work from clues about Joey's night of sketching after discovering her drawings of a nude Jack, while angry Dawson sets out to find Joey and Jack, while Pacey becomes distant towards Andie after their romantic dinner. In a true Gothic themed mystery novel backdrop complete with a thunderstorm and lighting, Abby and Chris gather all six suspects into a classroom after hours to bring out the author and which couple, if any, went "all the way".

The gang explore uncharted waters when the girls, Jen, Joey, Andie and Abby spend a day with Gail doing a TV report on teenage behavior amid the tensions between all of them over Jen and Joey's continuing feud and Abby's continuing insensitivity. Meanwhile, Dawson and Pacey explore their own uncharted waters when they go on a father-son fishing trip with Mitch and Pacey's grumpy and critical father, Sheriff John Witter, as well as Jack whom Pacey invites to tag along which brings out more tension between Dawson and Jack.

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.

Dawson's confidence as a filmmaker is shaken when his new film class teacher, Nicole Kennedy, a Hollywood movie studio executive on sabbatical in Capeside, speaks her mind and tells him the painful truth about his new romance movie and its faults. Meanwhile, the future is unsure for Joey when she visits a Gypsy fortuneteller at the annual Capeside Fair, who advises her to be open to every new opportunity that crosses her path. Shortly after, Joey stumbles into Colin Manchester, a gorgeous photographer who brings out Joey's free-spirited side during a wild photo shoot. Also, Jen tries to persuade Grams to go out with an old flame, and Pacey becomes more uncertain about where he stands with Andie.

With Joey's father back in town after being paroled from prison, he persuades Bessie to expand the Ice House to cater weddings. Needing help, they enlist the services of the gang as staff. Andie tells Pacey that she hates weddings, but he loves them, while Joey doesn't think her ex-con father should be seen around Capside. In a comedy of errors, Jack and Dawson battle to help a scared bride, Andie and Pacey scramble to fix the wedding cake, while Mitch shows up with his new girlfriend Nicole Kennedy making Gayle sad, and Dawson angry. Also, the trouble-making Jen and Abby crash the ceremony to steal some food and liquor for another night out which eventually leads to tragedy.

In the aftermath of Abby's death, all of Capeside is attempting to 'whitewash' her life. But all the hypocrisy is making Jen angry knowing that Abby's 'good life' was all a scam. At Abby's funeral, Jen delivers part of the eulogy where she embarrasses Grams by announcing that Abby taught her the falseness of God. Meanwhile, Abby's clueless mother asks Andie to deliver the eulogy after mistakenly thinking that they were friends. Joey is afraid to attend the funeral which brings back bad memories of her own mother's funeral while Dawson persuades her to overcome her fears. Also, Gail tells Dawson that she has accepted a job offer as an TV executive in Philadelphia.

With Dawson and Joey back together, he decides to take her out to a romantic dinner for old time's sake. But also eating out are Mitch and Nicole. On top of that, the restaurant, not realizing that there are two Leery parties, has only has one table available, forcing all four of them to sit together which immediately lights up tension. Also at the restaurant are Jen and Gail where Dawson, Joey and Jen attempt to reunite Gail and Mitch after Nicole walks out from the constant arguing. But the ploy only works temporarily. Meanwhile, Andie begins to fall into insanity when she begins changing her hair color from blond to brown, and begins having ghostly encounters with her deceased brother, Tim, while Pacey and Jack catch on and try to confront her with her mental state.

Concerned for Andie's well being, Jack phones their father who arrives back in Capeside where he announces that he intends to take both Andie and Mrs. McPhee to Providence for treatment in a mental hospital. Both Jack and Pacey are stunned at the news which leads to Pacey and Andie to decide whether her mental wellness is more important than being together. Jack also must decide if he wants to go with Andie and their mother, or stay alone in Capeside. Meanwhile, Dawson is preparing his film class' final exam by videotaping all individuals involved as well as helping Joey's father, Mike Potter, extend the Ice House for Bessie. After being shunned by everyone, Jen wonders where she'll live after her parents tell her by phone that she is not welcome to come back to New York.

Dawson's suspicions about Mike Potter become confirmed when he sees him selling drugs again and is torn on whether or not to tell Joey or leave things as they are. But Pacey's grumpy and misanthropic father, Sheriff Witter, is already suspicious and has the Ice House staked out hoping to catch Mike Potter in the act in which the restaurant is set afire by Mr. Potter's competitors. Meanwhile, Gail tells Mitch that she has decided to take the job offer in Philadelphia and wants to leave as soon as possible with Dawson. Pacey becomes more depressed as his school grades start decreasing now that Andie is gone from his life and his domineering father verbally bullies him. Also, Jen becomes more and more depressed over Abby's death in which Jack wonders if she is suicidal. Eventually, Grams asks Jen to come back to live with her and Jack is welcome to live with them too.