On her last night in Washington D.C. over the summer, Rory helps Paris get ready for an unexpected date. While missing Rory, Lorelai has been having strange dreams, including being married to having twins with Luke. Sookie decides she needs to make the house more masculine for Jackson even though he insists that he likes it the way it is. Taylor puts together an end of summer festival for Stars Hollow. When Rory gets back, she is upset to see Jess making out with a platinum blonde in the middle of town and admits to her mother about the kiss she and Jess shared, sparking a fight between Rory and Lorelai. Lorelai also fights with her parents when she tells them about Sherry and Christopher, and returns to Luke's in hopes of a reconciliation with him.
Lorelai and Emily continue to fight about over what happened between them, and Rory has to run interference. At school, Rory also has to run interference between Paris and Francie, and eventually comes up with a way to stop their fighting. Kirk asks Lorelai out, and Lorelai has to figure out a way to let him down easy. Things seem to go better until Christopher shows up at Friday night dinner, and both Lorelai and Rory have to confront him about Sherry. Meanwhile, Rory talks to Jess about Shane and why she never wrote him during the summer.
Rory receives her Harvard application in the mail and then learns from a visiting panel of Ivy League admissions experts at Chilton that all her instincts about how to fill it out were wrong. After panicking about her chances of getting into Harvard, Rory and Lorelai decide to consult a nearby Harvard alum, Darren Springsteen, and end up joining him and his Harvard-perfect family for a lunch filled with quiz questions, which calms her nerves about college. Darren later tells Rory that he thinks she's perfect for Harvard and he'll put in a good word with the admissions office for her. Later, the reality of college hits home for both Dean and Lorelai. Meanwhile, Taylor bullies Luke into renting him the retail space that he bought next door to open an old fashioned soda shoppe and Lane meets Dave, an aspiring musician looking for a drummer for his band.
Lorelai gives a talk at the Stars Hollow high school about her career, but the school moms get mad when she ends up fielding more questions about her teen pregnancy than anything else. Lane, distraught over having to sneak around to practice with her band and her mother making her apply to religious colleges, decides to dye her hair purple, but chickens out and dyes it back to black before her mom sees it. Rory, helping Lane with her hair-dying experiment, realizes that Jess's girlfriend Shane works at the local beauty supply store, and finds herself being uncontrollably rude to the ditsy blonde. Luke confronts Jess about his relationship with Shane, and Jess admits that he doesn't really care about her, he's just with her because the girl he really likes isn't interested in him. Jess recommends that Luke do something similar and stop wasting his time waiting for Lorelai.
Rory finds herself taking over Lorelai's job of watering their new neighbor's lawn while he's on a business trip, but she has trouble with the spigot and can't get the water to turn off. She runs to town for help and Jess ends up coming to her rescue, but when he hears that Dean is on his way, he turns the water back on so that Dean can then rescue Rory. Lorelai goes to a charity auction that her mother organizes and meets a cute guy named Peyton. She asks her mother for his number, and she and Peyton end up planning on going to a David Bowie concert next week, but also planning a dinner date sooner. After dinner with Peyton, Lorelai realizes he's incredibly boring, but when she tells her mother that she wants to cancel her concert date, her mother freaks out. Emily is friends with Peyton's mother, and is worried that this slight by Lorelai will affect her social standing in her DAR circle. After getting yelled at by her father, Lorelai realizes how important this is to Emily, and agrees to go to the concert with Peyton if it will make her mother happy.
Jess buys a used car from Gypsy, and Luke worries where Jess got that kind of money. Luke is amused when he finally gets Jess to admit that he has a part-time job at Wal-Mart. Lane takes it as a personal affront that Jess would get his own car after totaling Rory's. Rory gets an invitation to Sherry's baby shower, and admits to Lorelai that she's been talking to Christopher a bit on the phone. Lorelai drives Rory to the shower and gets talked into attending as well by Sherry. Sherry drives Lorelai nuts with her perfection and her planning and her gushing about how incredible Christopher has been through everything. Lorelai fumes on the way home with Rory and deviled eggs that they were forced to take with them. Rory suggests they throw the deviled eggs at Jess's car for catharsis. It works. The town loner gets permission from the town church to stage a protest, but when his banner falls the wrong way and then rips, no one can figure out what he's protesting.
Determined to win the annual Stars Hollow 24-hour dance marathon, Lorelai forces Rory to be her partner. While everyone in town dances around them, Rory and Jess can't seem to stop arguing with each other, a fact that is not lost on Dean. Meanwhile, Lane and Paris are both surprised when the boys they like drop by to see them.
Richard corners Rory at a family dinner and persuades her to accompany him on a visit to Yale University, his alma mater. Although Rory has her heart set on going to Harvard, she reluctantly accepts the invitation, and the trip becomes a family affair when Emily and Lorelai tag along. Once they arrive on campus, however, Rory is infuriated to learn that she has an appointment with the dean of admissions. Meanwhile, back in Stars Hollow, Luke lays down the law to Jess about his relationship with Rory.
Emily insists that Lorelai and Rory come to Thanksgiving Day dinner, which causes the girls to be even more overbooked: they have already committed to three other feasts, including celebrations being held by Lane, Luke and Sookie. While dining at the Gilmore estate, Lorelai is floored to learn that Rory applied to Yale University without telling her.
Lorelai has to miss Stars Hollow's Winter Carnival when Great Grandmother Gilmore pays a surprise visit and insists on having dinner with Richard and Emily at Lorelai's inn, where she makes a surprise announcement. Meanwhile, Rory's plans to enjoy the carnival with Jess are complicated when they run into Dean and his little sister Clara.
Rory is set up by the manipulative Francie who convinces Paris that Rory has been plotting against her. When Emily is sued by a former maid, Lorelai worries that giving a deposition in the case will cause more problems with her mother. Meanwhile, Lorelai meets an interesting new man at a business seminar.
When Lorelai surprises herself by agreeing to go on a fishing date with her new beau Alex, she turns to Luke for a lesson in fishing techniques. The political battle between Rory and Paris heats up when Paris tries to have Rory impeached. Meanwhile, Lane plots to go to the prom with Dave, and Luke asks Taylor's attorney out on a date.
Sherry's carefully planned labor goes awry when she goes into labor early and Christopher is out of town. Sherry asks Rory to be with her at the hospital, which reminds Lorelai of the day that Rory was born. Flashbacks tell the story of 16-year-old Lorelai as she learns she is pregnant, decides not to marry Christopher, and ultimately leaves home with her new baby. Luke goes on his first date with Nicole.
Lorelai goes off with her new boyfriend for a weekend in New York, but worries about leaving Rory and Jess alone together. Meanwhile, when Jess shows up for dinner with Rory and her grandmother, Emily, and refuses to explain his black eye. Rory accuses Jess of fighting with Dean. Lane hatches a plan in order to hang out with her new beau.
Tired of waiting for Jess to call and make plans for the weekend, Rory goes to a hockey game with Lane where she runs into Dean and his new girlfriend, Lindsay. Lorelai confronts Jess about his poor treatment of Rory. Meanwhile, Gran comes to stay with the Gilmores for a few days and Emily is shocked to find her mother-in-law kissing a man.
While nervously waiting for their college acceptance letters to arrive, Rory and Paris find themselves competing to give a speech at Chilton's bi-centennial, where Paris makes a startling admission. When Lorelai runs into her former fiance, Max Medina and they share a passionate kiss, she is left to wonder if ending the engagement was the right decision. Sookie's strange behavior has a surprising explanation.
When a meeting of the Edgar Allan Poe Society at the Independence Inn is interrupted by a fire, Lorelai must find rooms for the guests at various homes around town. Forced to give up her own room, Lorelai spends the night at Luke's. Trying to decide among Harvard, Yale and Princeton, Lorelai and Rory make an extensive list of pros and cons for each school. Luke worries that Jess may be skipping school when he learns that Jess has been working a surprising number of hours at Wal-Mart. Rory visits a humiliated and hibernating Paris to deliver school assignments and a pep talk.
While Lorelai deals with the rebuilding of the fire-damaged Inn, Rory schemes to give her mom a great birthday party, complete with a gigantic pizza. Richard surprises Lorelai with a large check from an investment he made when she was born, and Lorelai uses part of the money to repay her parents for Rory's education, a gesture which does not please Emily. Meanwhile, Luke confirms his fear that Jess has been skipping school to work extra shifts at Wal-Mart. Luke agrees to meet Nicole's parents. Paris returns to school a changed person.
With graduation approaching, Rory is happily looking forward to attending the Stars Hollow High School prom with Jess, but he gets some surprising news from Principal Merten. Lane's band makes its debut at a big party, but the evening ends on an ugly note when the long-standing animosity between Jess and Dean finally erupts into a fist fight. Meanwhile, Lorelai gets roped into serving on the parents' committee for the Chilton graduation party, putting her back in contact with a very uncomfortable Max Medina.
Both Rory and Jess avoid one another when they find it difficult to deal with their emotions after the fight at the party. When Lorelai and Sookie learn that the owner of the Dragonfly Inn has passed away, they see their chance to buy the inn of their dreams. Jess' long-lost father, Jimmy, shows up in Stars Hollow and introduces himself to Jess, then suddenly leaves town. Luke is furious when he learns Jess has flunked out of high school and gives him an ultimatum to repeat his senior year or leave. Rory finds out that Dean is engaged to be married. Lane's beau, Dave, pleads his case to a stoic Mrs. Kim.
After the blow-up with Luke, Jess leaves Stars Hollow for Venice, California, to stay with Jimmy, the father he knows almost nothing about. Jimmy admits he isn't capable of being a father, but promises to ask his live-in girlfriend Sasha to let Jess stay. Back in Stars Hollow, at the same time Lorelai is wondering how to tell Rory that Jess is gone, she learns that the money Richard gave her will make Rory ineligible for financial aid at Yale. Feeling stressed out about everything, Rory unexpectedly confronts Emily over her treatment of Lorelai.
As Rory's graduation day approaches, the Gilmore girls plan their long-awaited summer backpacking trip across Europe, even as Lorelai faces the possibility that the recent fire will force the owners of the Independence Inn to sell the building. Rory takes matters into her own hands when she discovers that Lorelai is making a great personal sacrifice to pay for the Yale tuition. Richard and Emily present Rory with a lavish graduation gift, and everyone is touched by Rory's moving valedictory speech. Meanwhile, Luke has second thoughts about a summer cruise with his new girlfriend.