Dawson begins his Hollywood journey as a freshman film student at California's USC. Joey heads to Boston to start college at Worthington University and meets her wild new roommate, Audrey. Pacey docks in Boston Harbor following his return from a summer of sailing. Meanwhile, Jen and Jack are invited to their first fraternity party while at Boston Bay College.
Dawson spends time with Joey in Boston, wondering whether he belongs there or in Los Angeles. When Joey leaves an upsetting break-up message on Dawson's answering machine, he confronts her and demands an answer about the status of their friendship. Pacey gets a new job at a restaurant. Jen, at Jack's urging, meets a guy named Charlie and ends up falling for him.
Having decided to drop out of USC, Dawson heads back to Capeside to tell his parents he's staying in Boston which causes an argument. His guilt over the argument is compounded when Mitch is killed in a car accident. Joey discovers Pacey working at the restaurant and ends up visiting his boat. Jack is accepted into a fraternity. Meanwhile, Jen and her new beau, Charlie, try to abstain from sex in order to get to know each other.
Dawson takes on the funeral arrangements for Mitch and tries to cope with the loss, as the group puts aside their current conflicts to come together and console the Leerys.
Dawson spends a weekend in Boston with Joey to ease his troubled spirits, but reconnecting turns out to be problematic for both. Jack is surprised by his boyfriend Tobey's visit, but ends up hurting his feelings due to the time demands of his fraternity. Jen finds herself jealous over Charlie. Pacey tries to establish good working relationships at the restaurant.
After suffering from anxiety attacks following his father's passing, Dawson opts for a drunken night on the town with Jack's fraternity, one which ends with an argument between him and Joey. Meanwhile, Joey interevenes when Audery's mother visits and offers some harsh critiques of her daughter. Jen decides to get back at Charlie for cheating on her, and Pacey learns his boss is cheating on his wife with his co-worker, Karen.
Jen convinces Dawson to return to the psychiatrist he'd been seeing for his anxieties, which prompts him to wonder whether or not he should return to film school to honor his father. Joey works on a project for claxs involving an obscure novelist and watches Audrey's tape audition for MTV's "The Real World". Pacey moves in on Karen when his boss blows her off to be with his wife.
Jen accompanies Dawson to New Hampshire where a film of his is being honored. Pretending to be a couple, they end up sleeping together, one time only, while in the honeymoon suite. Jack takes Joey and Audrey to his fraternity party, but the girls soon learn the fraternity brothers are hoping to score with them. Pacey and Karen go on a casual date which ends with the two unexpectedly sleeping together.
Jen plays DJ for a night on Charlie's radio shift and takes scary stories from callers. Meanwhile, Joey, Jack, and Pacey watch scary movies and discuss their scariest experiences afterwards.
Pacey cooks for the gang when he organizes a dinner at Gram's house. Jen and Dawson show up, vowing to keep their night in New Hampshire a secret, but are caught kissing on Gram's doorstep, much to Joey's surprise. Charlie also shows up, creating tension with Dawson, but the by the end of the dinner, the night's issues have finally been resolved.
When Pacey and Audrey tell Joey to lighten up, she shocks everybody by hooking up with Jen's cheating ex, Charlie, while at a club. Pacey ends up celebrating his new promotion with Audrey. Dawson and Jen argue about what Dawson hopes to with his career, prompting his decision to move in with Grams and begin a life in Boston.
Pacey must choose whether or not to return to life on the seas, this time working for his uncle, or continuing on at the restuarant. Jack moves from Gram's house to his fraternity house but finds that his roommate has issues with his homosexuality. Jen's new radio advice show ends up hurting Dawson's feelings. Meanwhile, at Audrey's urging, Joey decides to give Elliott a chance.
Joey juggles a new relationship with Elliot and a flirtation with an attractive professor. Pacey questions Jack's new attitude as a fraternity brother when Jack gets drunk and ends up picking a fight with them. Dawson eases into his new film school and takes on a directing job from Oliver, an obnoxious film student. Meanwhile, Jen's edgy radio advice show is suffering from too much happiness with Dawson.
When things go wrong on the set, Dawson asks Jen to enlist Charlie for the re-cast lead in his directing project, and asks Joey to help him calm down his leading lady, Audrey. Jack decides to leave the fraternity house after being falsely accused of an attempted kiss.
Joey is mugged at gunpoint on the street, only when her mugger is immediately run over by a car following the robbery, she decides to stay at the side of the man who reminds her of her criminal father. Meeting the mugger's estranged wife and daughter following his death, Joey lies about the incident, sparing the little girl the truth about her father.
Pacey sulks over an argument with Audrey and accompanies Jack to a gay bar where he learns, empathetically, what women must put up with from men. Jen and Audrey find their newfound romantic relationships with Dawson and Pacey tested when they meet two cute musicians. Following her mugging, Dawson keeps a watch on Joey, who has decided to end her relationship with Professor Wilder.
Pacey reluctantly gives Joey and Charlie a ride to Charlie's band's gig where Joey has been asked to sing, only during the ride, Audrey ends up having to be the peacemaker between Pacey and Charlie. Dawson, Jen, Grams, and Jack go to Capeside for Lily's first birthday, at which time Dawson learns his mother is seeing someone.
Dawson stresses when Oliver arranges a screening for their unfinished movie, but Joey reassures him that the movie is great. During the screening, Dawson argues with a woman who turns out to be a Boston film critic Oliver has invited.
The gang goes down to Miami for Spring Break. Pacey finds himself in another relationship test, keeping his cool as Audrey's former boyfriend shows up with tickets to a music event.
Charlie's band gets a record deal and readies to tour, prompting him to ask Joey to travel with him. When Joey decides to stay in school, Charlie quits the band, frightening her with his intense commitment to her. Dawson and Oliver's long-delayed New York agency meeting ends badly, causing Dawson to reconsider their status as a team. Meanwhile, Pacey's new restaurant owner-boss, Alex Pearl, decides to promote him and fire Audrey.
Pacey and his new boss, Alex, share an attraction for one another which gets them caught at his apartment by Audrey, throwing Pacey's relationship with Audrey in jeopardy. Jack and Joey try to catch up in their course workload, prompting Jack to turn to his old fraternity brothers for assistance. Dawson runs into film critic Amy Lloyd and the two end up sleeping together.
Pacey, angered by Alex's rude management style, stands up to her in front of restaurant investors, which causes her to lose her job. With the end of the semester, Joey and Audrey move back to Capeside.
Now that school is out, the gang makes summer plans. Dawson hopes to head to Los Angeles and work on his movie with Audrey, while Jen and Jack continue to plan a trip to Costa Rica.