"It girl" Serena van der Woodsen has returned to Manhattan after a mysterious and self-imposed exile to boarding school. Serena's best friend, Blair Waldorf, has conflicted feelings about her friend's return since she has enjoyed being the Queen Bee during Serena's absence and might not be ready to relinquish her new position on the social ladder, not to mention the fact that she has always suspected there may be unspoken feelings between Serena and her longtime boyfriend, Nate.
It's the day right after the Kiss on the Lips party and Serena receives a cold reception from her former best friend Blair. Blair reveals that she knows that Serena and Nate slept together, before Serena mysteriously went to boarding school. Then Serena decides to take Dan to Chuck's fundraiser brunch at The Palace. Meanwhile little Jenny asks Blair for advice, and Blair realizes that she maybe gains something by allowing Jenny into her inner circle.
It's Ivy week for the Upper East Side teens of Constance Billiard and St. Jude's and the visiting representatives' arrival brings more than just college applications. Cut-throat rivalry is at its sharpest this week as the students compete for prestigious positions. Blair discovers a shocking but juicy secret about Serena and plots to drop the bomb at the best possible moment. Dan is sure that landing the coveted usher position with the Dartmouth rep will either make or break his future at the school. Unfortunately, it's Nate who nabs the position, despite total disinterest in the school. Meanwhile, Jenny gets closer to Serena's younger brother Eric and Rufus asks Lily for a favor.
Blair gets excited when her mother, Eleanor, chooses her to be the new face of her clothing line. However, Blair's happiness turns quickly into feelings of betrayal and jealousy when Serena takes her spotlight and Blair finds herself back in Serena's shadow. Meanwhile, Serena and Dan remember once again that they come from two very different worlds. Also, Nate and Chuck do a boys weekend to blow off steam after Ivy Week ends.
It's their first official date and Dan tries to impress Serena with an elaborate plan for the date, but fails to understand that Serena is happier with beer than champagne. That same night Jenny is invited to the infamous Blair Waldorf sleepover and finds herself in a high stakes game of "Truth or Dare". Meanwhile, Lily finds out that Erik is missing from the treatment center, and she finds herself seeking help from her ex-boyfriend, Rufus.
Dan finds himself between two girls when his childhood friend, Vanessa, returns to N.Y. and declares her feelings for him, just as he and Serena are trying to figure out what they mean to each other. At the masked ball, Blair sends Nate on a scavenger hunt, but Nate is distracted by his feelings for Serena. Although Blair said that outsiders were not welcome to the party, a disguised Jenny and Dan sneak into the ball. Finally, Lily asks Rufus to accompany her to an Eleanor Waldorf event only to make Bart Bass jealous.
Serena and Dan finally accept that they are crazy about each other, despite that they come from polar opposite worlds. Chuck thinks of investing in a club trying to make his father Bart Bass proud of him. Nate confronts his father, about the drugs he found in his house but he denies having a problem. Jenny discovers a secret that her parents have been keeping from her. Finally, Blair is devastated by Nate's actions when Jenny reveals that Nate kissed her by accident thinking she was Serena.
Blair is feeling heartbroken and guilty by the current state of her relationship with Nate and her recent indiscretion. But she manages to put on a happy face for her 17th birthday party and attempts to hide her feelings from her friends. Hoping that Serena and Vanessa can bond, Dan takes Vanessa to Blair's birthday party. Jenny brings her mother home as a surprise, but Rufus isn't ready to forgive and forget. Finally, Nate's parents ask him to make a huge sacrifice to save his father's business.
Dan invites Serena and her family to spend the holiday with his family, creating an uncomfortable situation for Rufus and Lily. The children are unaware of their complicated romantic past. Meanwhile, Blair's freaks out when she learns that her father isn't coming home for Thanksgiving. Nate spends the holiday with his family, but their awkward dinner quickly goes from bad to worse.
The Debutante Ball is coming up, which Serena does not want to attend, but her grandmother CeCe does not like the idea of that and demands that she attends. Serena of course wants Dan to be her date but again, her grandmother has something to say, and objects to Dan being her escort saying that he is in no way a suitable. Jenny tries to decide if she is to visit her mothers art opening or attend the Debutante Ball. Blair who is also attending the ball decides to go with Nate, but just as friends but Nate begins to think that Blair may already be seeing someone.
Blair's father, Harold, comes home for the holidays with an unexpected guest. Blair cannot hide her disappointment and makes a plan to get rid of Roman forever. Jenny and Vanessa help Serena get the best Christmas present ever for Dan, who has a surprise of his own for Serena. Rufus refuses to remain the understanding husband any longer after Alison's former lover sends a letter to the house.
Serena, Blair, Nate, Chuck and their class break into the school swimming pool for a night of fun, but when someone nearly dies, the school threatens to expel the person responsible for the break-in. Everyone agrees to not say anything, but this creates major problems between Serena and Dan. Vanessa, while working on a documentary project about private schools, accidentally captures Blair and Chuck discussing their affair. Lily tries to tell Rufus how she really feels about him.
Gossip Girl reports that Serena van der Woodsen was seen buying pregnancy tests. Of course, on the Upper East Side, the truth is often even juicier and more scandalous than the gossip. Nate finds out about Blair and Chuck's affair. Everyone else also finds out what happened and Blair's life comes crashing down. Dan struggles to tell Serena those three words.
Having been recently dethroned as Queen Bee, Blair returns to school with the support of Serena to find she is still on the outs with her old friends. Dan visits his mother over spring break, and when he returns, Jenny is on the verge of becoming a full-fledged member of the A-List crowd. Jenny must go to dangerous and even illegal lengths to fit in. Serena struggles to adjust to living with Chuck, and receives disturbing packages from an unknown sender.
Serena's world is thrown into a tail spin when her former cohort, Georgina Sparks, returns to the Upper East Side in order to start trouble and reveal Serena's past in the process. When Dan notices Serena seems to be preoccupied, he assumes that it's due to her future brother-in-law Chuck. Meanwhile, Nate finds a new romance with Vanessa; Jenny meets a new guy, Asher Hornsby, who may be her door to permanent popularity; and Blair launches a plan to take down her rival, Nelly Yuki.
Georgina informs Serena that she can reveal a deep dark secret from Serena's past, but no one is prepared for what Georgina does next. Blair and Jenny's power struggle continues when each of them start spreading scandalous rumors about each other on Gossip Girl. Dan sees Jenny's new beau, Asher, cheating on her, but Jenny won't listen to him. Rufus goes to Lily for advice on how to handle Jenny's new behavior. Serena tries to confront Georgina, but she leaves before Serena has a chance. After this, Serena says that she and Georgina are not friends.
In the fallout of Georgina revealing why Serena left Manhattan for boarding school, Serena begins to fall back into her old ways. Seeing this, Blair, Nate and Chuck must put their feelings for one another aside to help Serena in her time of need. However, Serena cannot bring herself to tell Dan the truth, leading him to assume the worst about her. Meanwhile, Rufus' band is invited to play at a concert put on by Rolling Stone and assumes that Lily will not attend since it is the same night as her rehearsal dinner.
Blair takes matters into her own hands to help Serena with the manipulative and evil Georgina Sparks. Lily, while keeping Rufus in her mind, prepares for her wedding with Bart Bass that is designed to be the Upper East Side's social event of the year. Serena finally tells Dan the whole truth about her past and they try to work things out after Dan has cheated on her, but will it be too late? An unexpected guest shows up at Lily and Bart's wedding. Georgina is sent somewhere where she can do no harm. Blair plans to go somewhere with Chuck.