After losing her baby due to the fall from her horse, Krystle learns she cannot have another child. Steven and Sammy Jo begin dating, but at his cabin, he finds he cannot make love to her. Jeff quits his Uncle Cecil's business and joins Denver-Carrington. Fallon continues her affair with Nick Toscanni. Steven professes his love to Claudia and asks her to marry him. She declines, stating she's still in love with her husband. Fallon interrupts Nick's visit to Krystle in the hospital and angrily assumes the worst, demanding to know if she is ""another page in his appointment book."" Blake's attorney, Andrew Laird, returns from Washington with news of more trouble with the Middle Eastern oil leases.

Krystle almost sleeps with Nick, but stops the whole thing. Nick says he's in love with her, and that he wants her, but she won't cheat on her husband. Blake comes home and tries to tell her the paparazzi photo is not what it looks like, but she won't believe him. Jeff is angry with Fallon because of her abortion plans and wants to divorce her. Fallon cancels the abortion. Steven and Sammy Jo get married, and Steven decides he's interested in car racing.

Blake pretends he's still blind. Everything about Nick and Krystle is out in the open. Blake and Nick talks about the death of Nick's brother. Krystle brakes up with Nick and plans to leave Denver. Sammy Jo starts taking advantage of being a ""rich mans wife"". Blake does not like the idea of Steven being a racer driver and offers to adopt Jeff. Cecil, who has been helping Claudia finding Lindsay blackmails her to get information from Denver-Carrington if she wants to get more information. Blake persuades Krystle to stay in Denver when she tries to leave.

Fallon is brought to the hospital and gives birth to a boy. The baby is very weak and the chances for survival are small. Fallon is deeply depressed after finding out about Blake not being her father, and doesn't want to see nor Blake or Alexis. Claudia sleeps with Jeff and steals his key to the archive in Blake's Denver-Carrington. Krystle talks to the groundsman at the mansion and finds out about Alexis' shooting when she lost the baby. Alexis and Krystle have a real ""catfight"" in Alexis' studio. Alexis' detective, Morgan Hess finds out that Krystle is not legally divorced from her former husband, Mark Jennings. Sammy Jo leaves Steven.

Alexis prepares to have the wedding reception in Blake's garden. Rashid Ahmed's brother Farouk comes to Denver-Carrington to offer Blake a deal, but Blake turns it down. To get back at him, Farouk tells Nick that Blake is responsible for his brother's death. Steven leaves the mansion. Blake considers buying a big ranch and goes there with to look around. Blake goes alone for a ride in the mountains at the ranch. Nick follows him and starts accusing him for the brother's death. There's a big brawl, but they both calm down, and Nick leaves Blake alone. Blake's horse is then attacked by a snake. Blake gets thrown off and disappears down the hill. Nick watches Blake lying there unconscious, but leaves him. Little Blake disappears. Cecil has a heart attack when he's in bed with Alexis.

Everybody hears about the explosion and it looks like Steven is dead, though Blake goes to look for him. Alexis follows Blake. Sammy Jo's father comes to Krystle to collect Sammy Jo's share of Steven's inheritance, but Krystle throws him out. Joseph comes to Jeff's office and tells him to stay away from Kirby. Jeff is infected by the toxic paint and attacks Joseph. Mark continues to contact Krystle, who tries to get him out of her life. Blake finds out about all the contact between Krystle and Mark and is jealous.

Although Blake begs her to postpone taking action until Jeff's violent behavior can be explained. Fallon flies to Haiti to obtain a divorce; Mark shows up unexpectedly at her hotel. Adam asks Kirby to work for him; Alexis tells Adam she cannot allow Jeff to be poisoned. In his confused state Jeff signs over his son's shares of Denver-Carrington to Colbyco, and his own voting control to Alexis: Alexis is now in a position to control Blake's company. Jeff angrily confronts Mark on the tennis court, where he collapses and is hospitalized. Alexis worries the doctors will discover the poison in his system.

Krystle suspects Alexis knows the reason for Jeff's illness and tells Blake, who is busy obtaining an injunction to prevent his ex-wife from taking over his company. Jeff is discharged from the hospital; the poison in his body still not identified. Mark and Fallon return from Haiti, and Kirby observes them kissing passionately in the mansion's entryway. Kirby fantasizes making love with Jeff. In Singapore, Steven's secretiveness continues to arouse Dr. Chen's curiosity. Blake receives a call from Singapore and learns Steven may have been found.

Excitement brews in the Carrington household as-preparations are made for Steven's return. It is an emotional moment as Alexis, Fallon and Krystle embrace Steven, who is introduced to his brother Adam and son Danny. Jeff and Kirby are married in Reno; plans are underway to finalize the Denver-Carrington/Colbyco merger. Fallon and Mark continue their affair; Alexis confesses to Steven that she paid Sammy Jo to get out of Denver, and that she suspects Blake 'bought' little Danny from the girl. Steven heads to New York to find his wife.

Alexis receives a note written by the late Joseph, stating that he indeed set the fire to kill her because of the lives she's ruined with her manipulations. Alexis laughs it off, claiming she never intended to tell Kirby her mother was an ""attic nympho."" Blake lies to protect the girl, telling Kirby her father was worried Alexis would take control of Denver-Carrington and tried to kill her out of loyalty to his employer. When the murder attempt failed, the butler tragically killed himself. Claudia is released from the sanitarium and she and Steven make love. When Steven learns of Blake's plan to sue for custody of little Danny, he becomes enraged. Both men lose their tempers and wrestle each other to the ground.

In her new position, Krystle launches a publicity campaign to counter Alexis' slanderous remarks against Denver-Carrington. Jeff rejoins Blake's firm. Dex continues his campaign to win Alexis. Jeff learns Kirby was pregnant when they wed and is shocked to learn that Adam raped her. Fallon accompanies Blake and Krystle to L.A. to consult an architect about expanding La Mirage. While at the track, Fallon is swept off her feet by a millionaire playboy, Peter DeVilbis.

As Fallon plans to wed Peter, Claudia advises her of his womanizing. Fallon dismisses Claudia's concern, however, as she has with all the others who question the wisdom of her marrying Peter. Tracy sleeps with a newspaper reporter in exchange for a damaging story to scandalize Krystle. After Allegre is safely returned, Blake questions Jack Crager, the horse's trainer. After their meeting, Jack quickly phones Peter, who instructs the horse trainer to disappear until further notice. Distraught after learning that Peter has suddenly left the country, Fallon runs into the path of an oncoming truck. Jeff and Blake look on in helpless disbelief.

Blake and Ahmed close their international China Seas oil deal. Alexis learns of the coup and makes plans for a counterattack. Blake confronts reporter Grayson regarding his deceptive behavior with Tracy, and then quits his political post. When Tracy makes sexual advances toward Blake, she is fired. Steven is suspicious to see Dex in Alexis' office bearing violets - the same flowers being sent mysteriously to Claudia. Kirby's search for her mother leads her to the cemetery and her mother's grave. In Hong Kong to do business with Ahmed, Alexis rekindles their former romance. Claudia receives yet another mysterious call, this time from Dex.

As Blake confronts Alexis with his knowledge of her plot with Rashid Ahmed, Mark, on the balcony, listens with interest. Alexis is prepared to buy his silence. Blake travels to Hong Kong and learns Ahmed has left the country, leaving Denver-Carrington's money with the government. In Joseph's old bungalow, Kirby confronts Alexis, but her plan to kill her is foiled. After Mark successfully blackmails Alexis, McVane arrives and reminds him they're in this business together. Nervous that McVane will learn of his $100,000 hit on Alexis, Mark quickly opens an account at a local bank, as McVane looks on.

To raise the needed money, Blake sells his assets and mortgages the mansion. In a heated confrontation with Alexis, Tracy quits. Tracy tells Alexis of her ongoing affair with Dex. Alexis is again questioned by the police, who want the details of her affair with Mark. Fallon suffers another painful headache. Sammy Jo informs Steven she intends to stay in Denver and take custody of Danny. An unknown, beautiful woman, Dominique Devereaux, sweeps into La Mirage demanding the finest accommodations. When she attempts to question Fallon about Alexis, Fallon grows suspicious.

Steven accuses Adam of conspiring with Sammy Jo to kidnap Danny. Blake arranges to take out a mortgage on the mansion. He little suspects Alexis has signed the note and will become the owner if he defaults. A cross-country search for Fallon has developed few leads. Warren Ballard and Adam prepare Alexis' defense. Dominique Deveraux makes her singing debut at La Mirage, with Blake and Krystle in attendance. Krystle quickly senses Dominique's hostility toward Blake. Brady declines the Carrington's hospitality as well. Jeff finds a truck driver who gave Fallon a lift to Portland, Oregon, the night of the accident.

On the witness stand Steven testifies he saw Alexis push Mark to his death. Furious, hurt, and still claiming her innocence, Alexis disowns Steven. Dominique offers Blake $25 million for control of his company. Stunned, Blake offers her 40% of Denver-Carrington for $30 million. Jeff sees other women in an attempt to forget Fallon, but remains obsessed with his ex-wife. Dismissing her attorneys and deciding to represent herself, Alexis takes the stand and testifies she was not wearing the cape that incriminated her. The prosecution, however, proves it had been delivered to her and was found stuffed in a trash bin behind her building. The verdict is at last delivered: Alexis is found guilty.

Amanda insists Alexis acknowledge their relationship and begs her to reveal her father's identity. Alexis tells her it was simply an anonymous ski instructor in Gstaad. Steven and Alexis reconcile and he rejoins Colbyco, where Luke Fuller, an attractive young man, has just been hired as public relations director. Claudia enters Steven's office to find Luke straightening her husband's tie. Amanda goes public with a front page story announcing she is Alexis' illegitimate daughter. Jeff meets an attractive young widow, Nicole, whose late husband was Peter DeVilbis.

Krystle goes into premature labor and delivers a baby girl, who suffers from respiratory problems. She names the child Kristina after a friend who once saved her life. Claudia is uneasy when Steven accompanies Luke on a business trip. After confiding in Dean Caldwell, he moves to hug her, and the two are soon in a passionate embrace. Amanda overhears Dex tell Alexis to stop hiding the identity of Amanda's father. Jeff finds a photo of Peter DeVilbis in Nikki's hotel room.

Alexis attempts to persuade the head of the Chinese delegation to hire Colbyco. Blake is surprised to learn Lady Ashley is an Acapulco. Amanda has a romantic fling with Prince Michael of Moldavia. Claudia meets with Luke, asking him to honor Steven's request that they remain apart. Krystle makes a surprise visit to Daniel, who hurriedly hides maps and plans detailing a secret military maneuver. While riding, Krystle is thrown from her horse. Relieved she is unhurt, Daniel kisses her passionately.

As Alexis and Amanda emerge from an exclusive bridal salon, a car suddenly screeches to a halt and Amanda is pulled inside. A high-speed chase ensues. As Dex forces the kidnapper's car onto the sidewalk, Amanda breaks free. It is clear that Yuri, the Prince's chief bodyguard, is behind the kidnap plot. Steven requests Luke accompany him to Amanda's wedding. Adam and Claudia profess their love. Dex receives a telegram bearing tragic news. At a Los Angeles police station, a young woman appears who bears a striking resemblance to Fallon.

Elena confesses to Amanda that nothing happened in the bedroom with Prince Michael. Sammy Jo fits her roommate Rita with a blonde wig and has her practice duplicating Krystle's voice. Fallon has chosen a new name and heads for Denver. Dex is kidnapped by Yuri and his gang as Amanda and Michael recite their wedding vows. Dex breaks free from his captors and heads for the chapel, where terrorists have opened fire on the entire wedding party.

As Blake becomes increasingly disturbed by Krystle's sexual resistance, Joel tells Rita that she has to sleep with Blake. In the meantime, Joel takes the real Krystle out for a night-on-the-town, where they are seen by an astonished Alexis and Dex. Krystle's signals for help are ignored. With Alexis' financial backing, Galen prepares to send Michael to New York to hire mercenaries for their cause. Determined to reclaim the oil well, Claudia attempts to win over Steven, believing he can persuade Blake to relinquish control. Adam Carrington offers Bart Fallmont a handsome bribe to prevent a preliminary injunction against the family enterprise.

Speaking at her own prearranged press conference, Alexis brashly announces a masquerade party fund-raiser at the Carrington mansion. Upon returning from Hong Kong, Blake reluctantly agrees to host the event in hopes of persuading ex-senator Buck Fallmont to reevaluate his stand on the pipeline. Intercepting a call meant for Caress, Alexis learns of her sister's spiteful plan to write a book on her tumultuous life. Garrett confronts Dominique with the fact that Jackie's father is listed as ""unknown"" on her birth certificate. Dominique denies Garrett's assertions that Jackie may be his daughter. At the masquerade ball, Bart Fallmont shows Steven the newspaper headline running in the next morning's edition, which claims that Bart had a homosexual lover. Steven immediately suspects Adam's treachery and a fight ensues. Alexis then sets her plan for Blake's demise into motion when Ben removes his costume and reveals himself as Blake's brother.