Kirsten worries as the end of summer approaches and Seth still hasn't returned home. Ryan works on a construction site back up in Chino. Sandy approaches Ryan to go up to Portland with him to convince Seth to return home, but Ryan declines. Ryan eventually finds himself in Portland and both decide to return to the Cohen household.
Seth gets another student to join himself and Ryan in the comic book club, but his newfound friend turns out to be Summer's new flame. Hailey leaves Jimmy for an opportunity in Japan. Caleb is brought up on charges and arrested.
Seth takes on a job in an effort to show that people don't know him and get tickets for a concert as a way to appease Summer. Ryan has an unfortunate first meeting with the new girl, Lindsay, but eventually makes amends when they are partnered on an assignment. Caleb appoints Julie to head up the company, upsetting Kirsten in the process.
Sandy hopes that by defending and winning Caleb's case he will be able to get his own law practice off the ground with rich clients. Seth tries to find a girlfriend to replace Summer. Ryan finds himself attracted to Lindsay. Julie decides to get involved with Kirsten's company by finding new forms of revenue the way she excels, finding older men who find her attractive.
Seth, Ryan, Summer and Marissa go to the annual SnO.C. Winter Ball. Sandy gets closer to uncovering what Caleb has kept hidden. Julie learns of Marissa's affair with D.J.
The Cohens host a Chrismukkah celebration but a dark cloud nearly spoils it when it is revealed that Caleb had a daughter out of wedlock sixteen years prior; Julie and Jimmy start seeing each other again; Ryan debates about whether to invite Lindsay to the family Chistmukkah dinner.
Caleb's revelation prompts the Cohen's to attempt to accept Lindsay as part of the family. Seth tries to impress Alex by being a "bad boy" and fails miserably. Ryan tries to hide his relationship with Lindsay from Kirsten.
Lindsay and Ryan try to determine where they are in their relationship in the wake of Caleb's revelation.
Summer orders up a girls night out when Zach tries to celebrate their six month anniversary. Seth learns that Alex's ex is in town and Ryan learns that it's a girl named Jody. Sandy comes up with a good way for the Newport Group to gain a better image through community development, but Julie wants to start a magazine instead and Kirsten sides with Julie.
Seth finds an outlet for his angst in the form of a Newport Beach based comic book. Sandy is approached by his mentor to find his mentor's missing daughter. Marissa and Alex find time to "bond."
When Summer models for her comic book appearance, her and Seth nearly share a kiss. Kirsten and Lindsay's dinner with Caleb goes horribly wrong when a confrontation with Ryan brings about a minor heart attack.
Sandy tries to win over Kirsten with Valentine's gifts, but she still stings over his keeping Rebecca a secret from her. Zach, Summer and Seth take a field trip to San Diego to try and get the comic book made.
Kirsten visits Rebecca and though she convinces her to leave, she also learns that Rebecca loves Sandy. Seth frets over whether Summer and Zach had sex.
Rain hits the O.C. Marissa confesses her relationship with Alex to her mother. Lindsay finds out that she is Caleb's daughter after a DNA test, but still decides that she wants to leave town. Summer decides that she can't go to Italy and returns to Seth. Sandy gets stuck with Rebecca due to a road closure, but finds his way back to Kirsten.
The new editor for Newport living arrives, as does a shady man from Julie's past. Ryan reels from Lindsay's departure. Summer, Seth, Ryan and Marissa spend a night in the mall. Caleb and Sandy commiserate especially when Sandy learns that Kirsten has lost her wedding ring. Seth wants to get a look at the postcard that Zach sent to Summer.
Seth tries to rekindle the good old days of last year, but Alex, and her jealousy over Marissa hanging out with Ryan, begins to undermine his efforts to reunite the two. Julie comes to Sandy for help in quashing her blackmailer. Marissa and Alex break up.
Ryan frets over his brother's stay with the Cohen's after he's released from jail. Zach returns from Italy and lets Seth know that he met a girl there, eventually Summer learns that Zach's girlfriend isn't real. Caleb takes care of Julie's scandalous situation, only to have it reappear at the unveiling of Newport Living magazine.
Sandy gets Trey to help out with the Newport Beach Charity yard sale after Kirsten cons Sandy into taking the Honorary Chair position. With her mom and Caleb out of town, Marissa moves in with the Cohens.
Marissa learns that it's Trey's birthday and after an initial misunderstanding between the Atwood brothers, Ryan agrees to let her throw a party for him which quickly gets out of hand.
Sandy tries to handle the legal fallout from the party at Caleb's mansion for Trey's birthday that ended with a girl overdoing her ecstacy intake. Kirsten accompanies Carter to a wine tasting. Julie tries to work her charms on the returning Caleb, but finds it ineffective as Caleb has other plans. Seth has to miss a Death Cab for Cutie concert in order to get notes on Atomic County with Zach.
Seth and Ryan accompany Sandy to South Beach for a visit with Nana, but the two end up enjoying spring break while there. Sandy scares off his mother's fiancee.
Zach and Seth face off for Summer's affections. Reed convinces Summer to sign on to the "Atomic County" launch party, but when she appears in costume, it sends the boys over the edge.
Ryan tries to find out the truth about what went down between Marissa and Trey even as the prom approaches. He finds Trey in Chino and Trey says that Marissa jumped him, but afterward Ryan runs into Theresa and she tells Ryan to believe Marissa.
In the wake of Caleb's death, Sandy takes action to save his marriage to Kirsten and visits a rehab center. Jimmy and Hailey arrive in town for the funeral.