The 16 new contestants are introduced and face their first challenge. The designers are asked to create a look using only materials purchased from a grocery store. They have $75 and one day to complete their outfits.

The designers are asked to create a cocktail dress, using environmentally friendly or conscious fabrics, with their models as their clients. They have $75 and one day to finish their garments.

The designers are tasked to create a look inspired by the nightlife of New York City. They have $100 and one day to complete their designs.

The designers must create a women's wear look for the 2008 Summer Olympics Opening Ceremonies. They have $150 and one day to complete their designs.

Brooke Shields gives the designers their next challenge, to make an outfit she will wear on her television show Lipstick Jungle. They pitch their ideas to Shields, who chooses half of them as team leaders to be paired randomly with the remaining contestants. The designers have $150 and one day to complete their looks.

Former contestant Chris March returns to give the designers their next challenge: make an outfit for a drag queen. They have $200 and two days to complete their designs.

The designers are asked to make an outfit from the spare parts and raw materials of a Saturn hybrid car. They have four minutes to collect their materials and one day to complete their outfits.

The designers are taken to the offices and design showroom of fashion living-legend Diane von Fürstenberg. Their challenge is to create a look for her Fall 2008 collection, inspired by the movie A Foreign Affair. They have 15 minutes inside von Fürstenberg's sample room to select fabrics and one day to complete the outfit.

The designers are assigned recent college graduates and are tasked to give them a fashion makeover to help them enter the workforce. Each designer was to gear their look to their client's specific profession, while keeping their individual style. They have $100 and two days to complete their look.

The contestants are given the task of designing for each other, inspired by different genres of music. They have $150 and one day to complete the challenge.

The contestants head to the New York Botanical Garden to design an evening gown inspired by nature. They have $250 and two days to complete their dress.

The remaining designers are given two months and $8000 to design a 10-piece collection, plus a wedding gown, for Fashion Week. In the interim, each gets a special visit in their hometown from Tim Gunn. Back in New York City, the designers are given one more task, create a bridesmaid dress to go with their wedding gown.

In the conclusion of the finale, the remaining contestants pare their 12-piece collections down to ten. Then they present their lines to industry insiders at Fashion Week.