The day after New Years Day, Clare arrives at Casa Walsh from her Christmas stay with her father in San Diego and listens to the gangs New Years Eve mishap stories which include: Steve babysitting for his two rowdy teenage step-brothers, Ryan and Austin, whom sneak into the After Dark for some rowdy partying. David and Joe skip out on the After Dark party to help Donna peruse her escaped parrot. At the same time, the stress between Kelly and Colin over his drug use escalates to a point of him having Valerie hide his cocaine stash for him. Also, Susan's ex-boyfriend, Jonathan Casten, arrives in town which discourages Brandon when he learns Jonathan's true colors that he wants Susan back for himself.

Kelly's father Bill Taylor, arrives in town apparently to stay, while at the same time, she again catches Colin sniffing cocaine. Joe makes a professional call on Donna's cardiologist father who discovers that Joe may have a certain heart disorder. Meanwhile, Nat refuses to participate in Steve's film festival honoring Roger Corman after the gang sees him in one of Corman's movies from 1972 titled 'Unholy Rollers'. Things take a turn when Joan Diamond, a former actress and Nat's old fiancée, arrives for the festival. Also, Brandon continues to be jealous of Susan's ex-boyfriend Jonathan when he phones to speak to her and Brandon doesn't leave a message for Susan.

Jonathan returns to Beverly Hills which once again discourages Brandon during a writer awards dinner in which Susan receives an award for a poignant article about a woman's abortion. Later, Susan then reveals to Brandon that she was the woman the article was about in which getting an abortion was the reason that broke up the conservative-minded Jonathan and the liberal-minded Susan. Valerie pretends to be Colin's agent to an art collector who is interested in buying some of Colin's paintings, hoping she will get a share of the money, and that he will quit drugs. But Valerie becomes discouraged when after she sells two of his paintings, Colin vows to continue using drugs because he claims that being under the influence is part of his creative process. Meanwhile, Clare refuses to believe Steve's true story when his Palm Springs "old flame" Elle, (from the P.S. I Love You episode) a transvestite, suddenly shows up and starts flirting with her father. Also, Kelly tries to tell David and others that she has given up cocaine, but no one believes her.

Donna and Clare find Kelly's stash of cocaine in their beach front apartment, prompting her to move out to Colin's for an increased drug binge. Despite Brandon's intervention, Kelly refuses help and brushes everyone off. Joe's heart condition again comes out when he collapses after a biplane flight with Jonathan, Brandon and Steve. But Joe does not want anyone else to know because it might jeopardize his football career. Meanwhile, Valerie's old friend, Ginger LaMonica, inconspicuously returns to Beverly Hills and breaks her deal by blackmailing Valerie by revealing about the jewelry theft scam for money. Valerie refuses to pay, until Ginger offers another option: a sordid night with David.

On Valentine's Day, Clare makes a bet with Steve that he won't fulfill his pledge of celebrating celibacy at a Valentine's Day party that Donna's sorority throws. Meanwhile, Valerie sets Jonathan up with Ginger to keep her away from David, but her plan fails and when David learns the truth about Ginger and that Valerie will do anything to keep her secret, he leaves Valerie for good. Kelly travels to the rough area of L.A. to buy more cocaine for herself, gets kidnapped, and hits rock bottom. Also, Joe gets bad news when his coach tells him that he is off the football team after news of his heart disorder begins circulating.