This season marks the rather unforeseen return of Serena van der Woodsen to New York, from her hitherto unknown boarding school in Connecticut. Thanks to Serena’s continued absence and prolonged lack of communication, the initial reaction of her best friend Blair Waldorf, to her return, is that of intense hostility. After all, in the interim, Blair has gone on to become queen bee of the Constance Billard junior class. Adding fuel to the fire raging inside Blair, is her discovery that longtime boyfriend, Nate Archibald had actually slept with Serena a year back. With this piece of information under her belt, Blair has no desire left to continue her friendship with Serena. Having faced this bout of stigma from Blair, Serena commences a relationship with rookie Dan Humphrey. Simultaneously, their respective parents, i.e. Serena’s mother Lily and Dan’s father Rufus rekindle the romantic feelings that they had for each other in their yesteryears. Eventually, Serena and Blair manage to rid themselves of the spite that they had developed for each other, and become friends again. The impetus behind the patch up is provided by the understanding that Eric van der Woodsen was receiving treatment for trying to kill himself, as well as Blair’s unfair public slander of Serena.

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Meanwhile, Dan is uncomfortable with the Upper East Side, and so, maintains his distance from it. On the other hand, his sister Jenny is frantically looking to blend in to the high society of the Upper East Side, and even resorts to numerous unskilled chores, just to fit in. At the same time, Blair’s relationship with Nate only seems to be headed downhill, in spite of her efforts at keeping the relationship going. Once the relationship reaches its nadir, and eventually dies out, Blair ends up sleeping with Chuck Bass, a Casanova as well as close buddy of Nate. Over time, Chuck gets emotional about Blair, and not wanting Nate and Blair to rekindle their past association, threatens Blair that he would tell Nate about the intimacy between himself and Blair. In the meantime, Serena and Dan’s relationship is constantly tested by the elite class, as well as by the arrival of Vanessa Abrams, Dan’s best friend. In spite of all the challenges, Dan and Serena’s relationship manages to escape unscathed out of the turmoil, to only emerge stronger. It is during one of numerous dates between Serena and Dan that she tells him about Blair having slept with both Chuck and Nate in the same week, primarily because of a pregnancy scare that she had developed. Unfortunately, Jenny overhears Serena telling this to Dan. Armed with this piece of information, along with the burning desire still in her to become a part of the elite Upper East Side, she goes and tells Nate about Blair’s romping activities.

Still smarting from the newfound knowledge about Blair’s crass actions, Nate confronts Chuck in full public view of the whole school. Blair’s hitherto unblemished reputation is now tarnished and so is dethroned from the ‘queen bee’ position that she had been so smugly occupying. With Blair out of the picture, Jenny tries to rise through the ranks at Constance Billard but her efforts are deflated by Blair, using Gossip Girl, as a medium for doing so. As junior year draws to a close, Serena and Dan’s relationship begins to sour. Meanwhile, Georgina Sparks returns to the Upper East Side, and is keen on reinstating her friendship with Serena. Serena though is unwilling to rekindle her friendship with Georgina, whereby Georgina meets Dan under the garb of Sarah. She even manages to get affable with both Dan and Vanessa, while at the same time, threatening to reveal Serena’s shady past. After initial hesitation, Serena spills the beans to Blair, Chuck, Nate and even Dan, about the real reason for her leaving New York – the fact that she was involved in the death of a drug dealer. She also comes clean about Georgina Sparks. At this juncture, while Dan and Serena attempt to amend their estranged relationship, Dan finds it increasingly difficult to cope with both the lies as well as the class differences between them. As a result, they eventually break up at the Bass wedding. Conversely, Chuck and Blair try to patch up at the Bass wedding, but eventually fail in doing so, as Chuck is unwilling to commit himself to Blair.