Hobie falls in love with a girl in junior lifeguards; Mitch and Jackie have a number of interrupted dates; Matt and Summer discover that they love each other. Thinking he is romantic, Hobie takes the girl on jet ski to a cove near a seaside monastery to kiss her as the bells toll, but they get caught in a dangerous current.

After witnessing a rescue, a bumbling, ambitious TV producer, named Don Brand, decides to make a pilot movie, titled 'Rescue Bay', based on the life of the Baywatch team which results in chaos from everyone after observing their own "characters" in the show, including Garner's look-alike character, C.J. playing Stephanie's role, and Mitch caught in the middle of it all in playing himself.

Stephanie returns to Baywatch only to become victim of an ultraradical eco-terrorist trying to destroy an offshore oil platform. Mitch makes waves in Garner's relationship with a new lifeguard.

Cody puts his career (and life) on the line when he starts using a performance-enhancing supplement in hopes of making it to the 2000 Sydney Olympics, which soon begins affecting his life guarding job as well.