Steve arrives in Albuquerque, New Mexico and tracks down his grandfather, Al Brown, a diner owner. Al explains that his daughter gave up Steve because she was very young and wanted him to have a good home. He sadly reveals that Karen Brown died in a car accident many years ago. Steve leaves flowers at her grave, and convinces an eccentric Santa-like charter pilot to fly him home for Christmas. Back in California, Cindy is depressed about her first Christmas in Beverly Hills. She invites the kids' friends and their families for Christmas Eve dinner, but everyone has other plans. Brandon visits Emily in a psychiatric hospital, where she is doing very well. Meanwhile, Brenda begins work at an upscale clothing store. A mysterious old man steals a Santa Claus suit from Nat at the Peach Pit, and later shows up at the boutique store where Brenda works. She feels bad when her brass boss throws out the cheerful old man. After work, Brenda stops the police from harassing the old derelict wearing the Santa suite and invites him over for dinner, much to the wariness of Jim and Cindy. Also, Dylan goes to see his father in prison, and talks with the same Santa. Elsewhere, Kelly's mother, Jackie, is furious when David's father, Mel, backs out of Christmas Eve plans because his estranged wife asked him to come over with David. Samantha, Kelly, Jackie, Andrea, David, Mel, Donna, Dylan, and Steve all show up at the Walsh house for dinner and caroling. The old man in the Santa suite gives everyone presents and describes his lonely life: his children are grown and his wife died a year earlier. He thanks Brenda for her kindness and generosity, then mysteriously disappears as footsteps are heard on the roof.

Brandon becomes jealous of Andrea's new boyfriend, Jay, who invites her to Houston with him for a Republican convention, while she tries to get Cameron, to join on her day care group outings. Dylan's father, Jack, asks to put in a good word for him at his parole hearing, and Kelly keeps Dylan some company while mending her broken heart over leaving Jake Hanson (see Melrose Place). Meanwhile, Brenda and Donna arrive in Paris and they get a less than dazzling welcome to the City of Light after meeting brash students, as well as eating at a local restaurant.

During SATs week, Brenda tries desperately to quit the smoking habit she picked up while in Paris. At the same time, she talks a little too openly to Beth Nielson, a tabloid-TV reporter, about life in Beverly Hills, who twists her story and her friendships. Meanwhile, Nikki turns her sights on Brandon and tries to win his affections. An academic shortcut tempts Steve when a West Beverly alumni, B.J. Harrison, offers him the master key to the school. Also, Dylan visits his father in prison again who gives him some advice on his future.

A rainy Thanksgiving brings uneasy get togetherness when Brandon brings over Jack Canner, the homeless man he tried to help out the previous summer, after Nikki leaves town to visit her parents in San Francisco. Meanwhile, Steve, now expelled from school, joins his mother for a TV shoot in Santa Barbara to some time break his bad news to her. But Samantha Sanders actually sticks up for Steve and gets him conditionally readmitted to West Beverly. Also, Dylan brings his father home for Thanksgiving and must cope with his presence and his new girlfriend Christine.

Dylan's father, Jack, is finally released from prison to enjoy his son's company, and sets eyes on his trust fund. David doesn't know where he will live after his father moves out of Jackie's house. Meanwhile, Brandon's addiction to gambling intensifies when he starts using his own college money. Andrea decides on a new look for herself by her hair dying it red and trading her eyeglasses for contact lenses. But other than Donna, no one seems to notice Andrea's make over. Also, Dylan finally chooses Kelly over Brenda who is worsened after they tell her about their summer fling they had while she was in Paris.

Dylan's estranged mother, Iris, returns to Los Angles which resurrects old family hostilities for she doesn't trust Jack with handling Dylan's trust fund, as does Jim. Brandon continues gambling and splurges his winnings on skis and a new car stereo. Meanwhile, David and Steve meet with the eccentric Icon Records Company president Curtis Bray, who tells David that he will give him a recording deal only if he fires his personal manager Steve. Brenda spends the entire weekend in her bedroom moping about her lost relationship with Dylan, while dreaming evil dreams on doing physical harm to Kelly whom she unfairly blames for her and Dylan's breakup. Also, Andrea goes to a luncheon for Yale acceptances where meets her old friend Jordan Bonner.

After dissolving the trust fund, Dylan, Jack and Christine enjoy the good life together on a friend's yacht at Marina del Rey. But they are all under observation by unidentified men. Meanwhile, finances force Kelly's mother to put their house up for sale. Brenda, Donna and Cindy take a class in self-defense. Brandon continues gambling and starts losing money totaling $500 which makes Duke rather angry, but lets Brandon slide his losses. Andrea get invited on a date with Jordan. Also, David meets with Serge Menkin, his new recording manager, who insists that David record some different rhythm tracks.

El día de la graduación, la pandilla recuerda los momentos más memorables de los últimos tres años. Andrea pronuncia su discurso de graduación y todos celebran. Dylan también tiene un misterioso encuentro con su difunto padre, quien le aconseja que no necesita ir a la universidad para demostrarse a sí mismo. En cambio, Dylan le pide a Kelly que haga un viaje por Europa con él durante el verano. Steve también decide ir a la Universidad de California para estar cerca de sus amigos, mientras que Brenda decide regresar a la universidad en Minnesota. La noche de la graduación, todos se encuentran en las colinas de Hollywood, cerca del gran letrero de Hollywood, para crear su logo en el letrero para que toda la ciudad los recuerde por los años que pasaron en West Beverly High School.

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.

Dylan becomes intrigued with his past after he and Steve see a live news report showing a group of plane crash survivors, one of whom is the dead-splitting image of his long death father Jack McKay. Dylan tries looking into his family storage locker, but finds it broken into and ransacked. Dylan then goes to see Christine Pettie, the FBI agent who was involved in protecting his father many years ago, but she is not very helpful and advises Dylan to leave this alone. Meanwhile, Noah's return to drinking gets worse when he intrudes on Donna's newest date Eli. Kelly compromises her personal feelings for her new profession when her first PR assignment is to cover gay teen groups in schools. Also, David ponders his further relationship with Camille when the issue of how to satisfy her arises during their first night together, while Donna hires Camille to work at the boutique.

Matt and Kelly aid Dylan in trying to help him find his father in which the search leads them to Arizona where they find Dylan's father, who lives under the alias Eddie Waitkus, and has a wife and young son. Meanwhile, Donna brings Noah at the beach apartment to convalesce for his injuries where he begins to take advantage her loneliness to make the moves on her. Janet becomes worried when Steve reverts to his old partying form when his stepbrother Ryan visits. Also, Camille tells David that she's beginning to resent Donna's constant phone calls to him for support which intrudes on their evenings out.

Jack McKay suddenly shows up at Dylan's front door of his hotel room where he makes him an offer to be a part of his life in which he will leave the witness protection program that he is in. But Dylan is approached by Christine Pettit who warns Dylan about a rash decision that his father is making since he is still a marked man by his former mob partners. So, Dylan tells Jack to go back to his new life in Arizona while he deals with his own. Meanwhile, Steve lobbies for Ryan's return to college who falls under the influence of Noah in bar-tending at the After Dark. David interviews for a radio job in New York City while Donna and Camille worry about this turn of events. Also, Matt reopens his practice after his suspension and his first client is a stand-up comic named Stuart Patton who's jokes are funny only to Matt.