Brenda calls Dylan from jail in the hopes of keeping her arrest a secret, but he is forced to tell her parents. Brenda's friends avoid her out of fear of being accessories after the fact and Kelly acts especially bitchy because she is tired of Dylan coming to Brenda's rescue. Brenda faces felony charges, as her crime was a federal offense. An FBI agent who had gone undercover with the activists offers her immunity in exchange for her testimony. Kelly apologizes for shunning Brenda. Andrea gives Donna a healthy puppy (Rocky II) to take her mind off Rocky's death. Steve and his overbearing father, Rush, take on a baseball star and his dad in a father/son golf tournament. Steve catches his father cheating and forces him to complete the game honestly. Lucinda receives a grant for her movie and leaves the university. Josh threatens to expose Brandon's affair with Lucinda unless he endorses his campaign for student president. Brandon calls his bluff and Josh eventually has second thoughts.

When Dylan is put in a coma after a car accident while driving under the influence of heroin, bizarre near-death dreams he has mirror his fight for life which involve his drug dealer, his high school principal Mrs. Teasley, Kevin, Suzanne, Erica, Valerie, the Walshes, and his own long-dead father, Jack. Meanwhile, Steve is bothered by the appearance of his annoying and overbearing father, Rush, at a flag-football tournament as part of the KEG sports weekend.

Brandon and Dean Trimble are caught in the middle of a conflict when several Jewish students, including Andrea, protest the scheduled campus appearance of a controversial, anti-Semitist, African-American orator, in which the demonstrations and near-riots disrupt Kelly's photo shoot for the magazine. Meanwhile, Donna plans a party for Ray's 25th birthday. In the hospital, Dylan spends the time talking with his mother Iris, while his drug dealer pays an unexpected visit and threatens him not to tell the police about their business.

In the aftermath of the house fire, Kelly suffers second and third degree burns on right wrist, ear, and the whole right side of her neck. Allison's injuries are much more severe, but she maintains a positive attitude. Brandon is racked with guilt because of his feelings for Emily. Kelly does not react well when she learns that Emily is still in town. She calls Dylan to discuss her insecurities and Brandon visits him in search of advice. Kelly believes that Brandon is only staying with her out of guilt, but Emily eases her mind when she reveals that he expressed his love for Kelly before the fire. Meanwhile, Steve feels guilty for the house fire and calls upon his father, Rush, to help out. Griffin's father hires an accomplished attorney for Steve and Griffin where Rush advices both to plead guilty to criminal trespassing in order to avoid jail time. Steve and Griffin receive two years of probation and community service... and are forbidden from operating dance clubs or parties for two years. Steve is furious to learn of this provision, especially after he discovers that Griffin in fact stole the keys from his father's real estate office to the house, rather than obtaining permission to use it for the rave. Steve tells his father that he didn't know about what Griffin did, but Rush (being more arrogant and narrow-minded) refuses to believe Steve and tells him not to ever call on him again for help. Afterwards, Steve physically attacks Griffin and orders him to leave the fraternity. Elsewhere, Ray's perpetual bad mood confuses Donna. He explains that his mother always begins drinking around the holidays, as his drunkard father left her on Christmas... after pushing her down the stairs and causing her to have a miscarriage. Andrea and Jesse throw a party for Hannah's first Hanukkah. Jesse obtains work as an attorney for those who cannot afford representation. He is frustrated by the court treatment of a single Mexican immigrant father, whose kids are taken away when a babysitter neglects them. At the end, Dylan comes home from rehab and is greeted by a letter from a stranger who found Erica's bathroom note pleading for his help.

On their semester break, Dylan and Brandon take a motorcycle trip through California and they end up being subjected to slave labor by a Native American sheriff for trespassing on a reservation, which helps dissipate the tensions between both of them over Kelly. Meanwhile, Kelly benefits from attending psychology workshop seminars run by a famous, psychology professor named Patrick Finley. Donna tries to help Ray get over his stage fright on the eve of his debut at the grand opening of the Peach Pit After Dark. Steve spends the weekend moping over his father, Rush, taking over the Peach Pit After Dark club from him.

An unseen psycho, who may be the creepy grad student Lenny, creates a crime wave on the CU campus which includes the rape of a coed, worrying everyone. Meanwhile, Ray decides to leave town after Valerie buys the Peach Pit After Dark from Steve's father for her own use. Peter tempts Andrea to stay out late at the hospital with him, so she gives in to his requests to sleep with him. Also, Dylan is tempted by Valerie to fall off the wagon again. Seeking answers to his path in life, Dylan tracks down and finds his rehab friend Charlie Rollins, a motel owner, where Charlie tells him his idea of writing a movie screenplay to make money and asks Dylan for a little help.

The gang goes to Palm Springs for the national KEG/ALPHA fraternity/sorority convention, where Steve tries to find the perfect woman for himself after he rejects the blind date his father sets him up with. But Steve gets more than he bargained for when he meets a shady women named Elle. Kelly spends a day shopping with Alison in which David and Clare misinterpret their relationship as something else. Jim and Cindy put their house up for sale before moving away to Hong Kong. Meanwhile, Donna brings Ray along to make up with him, but later regrets it when he injures her during a fight, while he manages to stay on the good side of her mother. In another part of town, Dylan and Charlie meet with Tom Rose, a mobster-type businessman as a potential backer for their film who agrees to finance their movie, but only if Tom's beautiful, but untalented mistress, gets the lead role.

In Palm Springs, Brandon reacts coldly to Kelly after mistakenly thinking that she and Allison are more than friends; he considers surrendering to Valerie's advances toward him. Things get even worse for Brandon after he's arrested for driving Valerie's car when he's pulled over by a traffic policeman, who finds Valerie's marijuana stash in it. Meanwhile, Steve finally learns Elle's secret of being "more than a woman." Donna decides to give the possessive Ray a second chance, and rudely blows off Valerie, revealing she's figured out that Valerie seduced Ray. Also, Tom Rose and his thugs threaten Dylan with death when they catch him phoning agent Christine Pettit to make a background check of Mr. Rose, for they know something about Dylan's father's murder. This prompts Dylan to terminate his partnership with Charlie and return to Beverly Hills, determined more than ever to find the mobster who ordered his father's killing.

Cindy Walsh comes home to Beverly Hills for Christmas, without Jim. Colin celebrates his holiday blues by sniffing cocaine which begins to put a rift between him and Kelly. Joe plans the perfect gift for Donna on her 21st birthday that same day; a talking parrot. Meanwhile, Steve's so-called "Christmas Curse" continues when someone's error costs him his job at the agency and incurs the wrath of his father Rush who, being the businessman he is, refuses to believe Steve's innocent claims that his job loss is not his fault.

At a frat party Steve hosts at Casa Walsh, things take a turn for the worse when Steve's two teenage half-brothers, Ryan and Austin, start drinking excessively in which Ryan passes out and almost dies from alcohol poisoning. When Rush finds out, being arrogant and narrow-minded as usual, naturally blames Steve for the near-disaster. Valerie brings Colin to the party, who's between incarcerations. Meanwhile, Tara gets out of rehab and moves in with Kelly, Donna and Clare at the beach front apartment. Also, Kelly invites Greg, a med-student from the rehab center, over to the party and whom ends up saving Ryan's life.

Carl hosts Steve's weekend long 21st birthday bash on the ship Queen Mary in Long Beach, where the music group "The Goo Goo Dolls" entertains. Carl then asks Steve a favor: to have a chance with Clare who he has had a crush on. David and Donna grow more intimate while their producer Erik, makes a move on Donna and other women as well. Andrea Zuckerman arrives in town to have fun at Steve's party, and Nat brings Joan along who keeps feeling unwell. Meanwhile, Valerie hires an FBI agent, named Richard Ballen, to find Colin who's in the area trying to get access on a ship to take him to South America. Also, Susan tells Brandon that she has decided to leave town to accept a job offer at a newspaper company in Washington D.C. which makes him wonder if he has a future with Susan after all.

Steve becomes depressed and frustrated with his father when Rush doesn't approve of the quick and easy future Steve has planned following graduation from C.U. Clare tells him that her father wants her to move to Paris with him after graduation and wants Steve to come with her. Meanwhile, Kelly's father, Bill, arrives in town for another visit and meets with Valerie, who tells her that Derrick Driscoll is actually an embezzler who just ripped off all her money that she invested. Kelly receives disturbing medical news that she may not be able to bear children. Also, Donna flakes out on her last final exam with Professor Langley.

On the day before commencement, Kelly becomes determined to oust Valerie from the Walsh house (and town) and pressures Brandon to do so. Meanwhile, Donna decides it's time to move up to a new level of romance with David after getting advice from her grandmother. Steve plans to pull the "best senior prank ever" with some help from his frat brother Muntz, as well as David.

On the day of graduation, a broke and lonely Valerie disrupts Kelly's plans when she takes off on a mindless spree causing Brandon to delay the ceremony to look for her. Kelly's father, Bill, throws a 1920s nostalgic post-graduation party for the class and has the The Cardigans band perform. He also tries to make up with Kelly, who continues to push him away. Steve's stepbrothers, Ryan and Austin, show up for festivities where Ryan is drawn to Kelly's half-sister, Joy. Also, Steve's plans for Clare derail due to her decision to move to Paris with Chancellor Arnold, which leads to Steve and Clare breaking up for good.

Kelly is struck with amnesia after suffering mild brain damage from an emergency operation for her wounds, and Noah takes it upon himself to take Kelly on her first excursion outside the hospital. Meanwhile, Brandon quarrels with himself over what to do when he receives an offer for a newspaper job in Seattle. Steve attempts to make his first 'faux pas' as a sports agent to impress Carly at what he does for a living. Donna has an on-the-job crisis when she loses her new boss, Jane's dog while taking it to the vet. Noah also offers to help David look for a band to perform at the Peach Pit After Dark while at the same time, David to continue to keep his financial problems with the After Dark from Donna. Also, Valerie (for some suspicious reason) offers to help Donna with her job to land more clients.

While investigating Donna's story about working conditions at a sweatshop, Brandon discovers that Steve's father is involved, which brings up tension between Brandon and Steve over publishing the story. The events also throw off Steve's plans to take Carly and her son, Zack, to an amusement park. Meanwhile, David's financial problems with the After Dark worsen due to studio costs and Devin's racist remarks. Kelly still has partial amnesia when she is called to pick out her shooter from a police lineup. Valerie turns on her deviousness again when she begins stealing Donna's design clients for her own purposes. Val finds herself in a quandary over whether to be with Donna's new client, Cooper Hargrove, or with Noah, who wants to go back to Hawaii for a job.

Following Brandon's arrest, sparks fly between him and Kelly over his ongoing refusal to reveal the name of his source, until Erica proposes a way to help him entrap Riggs in a sting operation. Meanwhile, Valerie seeks to learn who anonymously helped David pay off his loan shark, and learns the truth about Noah and his wealthy background. At the same time, David's jealousy and pride get the worst out of him after he rejects help from Donna after a fire breaks out at After Dark. Steve & Jodi, then Steve & Rush, talk about paternity and if he is ready for fatherhood; Steve goes to Carly for comfort. Kelly volunteers for a new job at the free clinic and meets the volunteer doctor Monahan. Noah starts dating Donna after telling her about his wealthy family.

Steve and Janet finally break the news of her pregnancy, which garners hostility from her conservative mother and father, and mixed reactions from his unorthodox father, Rush. Meanwhile, David tries to curb his radio persona in an attempt to make up with Robyn, but is sidetracked by fans wanting more of his love life. Both Matt and Noah offer to move out of the house to make room for Steve and Janet's nursery. Also, Dylan tries to help out a hotel maid who has to bring her two wild sons to work with her. Gina proposes a plan to Noah, to turn the After Dark into a gentlemen's club to make some quick cash.