Claudia is released from the hospital. When she comes home, she tries to kill herself by taking an overdose with pills, but she's saved by Blake's friend, dr. Nick Toscanni. It turns out that Nick's secret plan is to get back at Blake for something that happened in the past. Fallon and Jeff decides they want to have a baby. Claudia moves into the Carrington mansion. Blake tries to get Alexis out of his property. Alexis tells Steven that he is Blake's only child and that Fallon's father is another man.

Blake's trial continues. Both Joseph, Claudia and Krystle have to testify. When Claudia testifies, she has to tell that she had an affair with Steven, and then Matthew finds out about it. He makes rebellion in the court room, attacks Blake and has to go to jail. Claudia packs her stuff, runs away, and takes Lindsay with her. On the way, they collide and get serious injuries. In the final scene, Jake Dunham calls in a new witness, and in walks a mysterious woman. It turns out to be Alexis Morrell Carrington - Blake's first wife.

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.

Blake tells Alexis that Charles Matthews knew about Fallon's childhood nightmare. Matthews also knew that Blake's father, Tom Carrington, covered up the incident. Alexis blackmails Blake for half of the plundered Nazi treasure. Jeff and Dex enlist Zorelli's help to dig up information on Captain Handler. Fallon dreams of the lullaby she heard Krystina sing. She remembers the lullaby came from a music box that was part of the treasure. Fallon asks Krystina to show her where she found the music box. Alexis offers to give up her claim for half of the treasure, sparing Blake public scorn, if Sable withdraws her lawsuit against Colbyco. Sable agrees. Krystina leads Fallon into a secret tunnel passage and to the hidden treasure, unaware that Dennis Grimes has followed them. Handler meets with the mastermind behind the scheme to steal the treasure, but his identity is never revealed. Grimes takes Fallon and Krystina hostage inside the tunnel. Handler and several police officers raid Blake's ma

Alexis suffers recurring nightmares about Mark's death. Kirby again tries to kill Alexis. When she is unable to pull the trigger, Alexis offers to remain silent in exchange for Kirby's agreement to leave Adam. The truth behind the attempt to unhinge Claudia is revealed. Sammy Jo seduced Hess into handling it, and has returned to him now to solicit his help in regaining her child. In preparation for the wedding, Alexis and Krystle visit the same beauty salon. The two women exchange words, and a mud-slinging melee ensues. While dressing for the wedding, Fallon is gripped by a seizure. She drives off as the ceremony is about to take place. The police arrive and arrest Alexis for the murder of Mark Jennings.

Krystle regains consciousness and finds herself locked in the attic at Delta Rho Farms while Rita is impersonating her at the mansion. Dex is caught and tortured in Moldavia. A furious Blake learns Adam lied to him by canceling a business trip to marry Claudia. Blakecuts Adam out of his will. Claudia is upset to find Michael has been appointed chairman of La Mirage. The Colby family attends Blake's party to announce the formation of the Carrington-Colby pipeline. Blake, however, continues to question Jason's integrity. One-time lovers Dominique and Garrett Boydston, Jason's chief counsel, are reunited. From his bedroom window, Jeff spots Miles Colby arriving with Fallon.

Blake is shocked when newspaper headlines announce Ben's acquisition of the South China Sea leases. Sure of Ben and Alexis' collusion, Blake greets the co-conspirators with copies of ""Sister Dearest,"" which he vengefully hands out to the hungry press. Claudia informs Blake that while ill, he gave Adam power of attorney to turn the Lankershim One oil well over to her. Disturbed that the well is nearly dry, Claudia becomes lost in a dreamlike past. Locking herself into a candlelit room, she accidentally sets the room ablaze. Sammy Jo and Amanda fight for Clay's affections during Dominique's engagement party. When a vicious struggle lands both women in the pool, Amanda holds a helpless Sammy Jo under water. Dominique's happiness is shattered when she learns that Garrett was never married before. After manipulating Ben into giving her one half of the leases, Alexis plots her ultimate revenge. Calling in her one billion dollar loan, Alexis renders a stunned Blake financially impotent. When

Convinced that someone is trying to frame him for Chisolm's murder, Blake turns to Charles Matthews for answers to his father's mysterious past. Matthews tells Blake a dark secret that leaves Blake in a daze. Zorelli finds a bug in his apartment, which Dennis Grimes, and Captain Handler planted. Jeff finds out that Adam was responsible for the story that accused him and Monica of being involved in an incestuous affair. Jeff confronts Adam and a serious brawl ensues. Walking in on the fight, while Sable and Monica watch, helplessly, Alexis uses the moment to announce that Jason Colby is not Monica's father. Outraged by Alexis' betrayal, Sable hurls herself atop of Alexis, pummeling her wildly. Adam tells Alexis that the painting Grimes gave her is a Fredrick Stahl. Putting the connection together, Alexis realizes Blake is hiding a treasure plundered by the Nazis. Sammy Jo tells Tanner that she loves him, leaving him torn between his vows and his love for her. Sable tells Dex that he is

Blake is arrested for the murder of Ted, and a big trial comes up. The prosecutor is Jake Dunham, an old friend of Claudia and Matthew, who does not like Blake. Krystle hears about the trial and decides to come back to Blake to be with him, and then solve their problems later. Fallon is afraid and to help her father, and she lies in court. Steven tells the truth about what really happened, though.

Blake's fortune now rests on the decision of a group of bankers, who will decide whether to extend his loan or call in the debt immediately. Alexis hires Tracy to obtain confidential information on Averell Dawson, Blake's banker. Shortly thereafter, Blake learns his extension has been denied. Jeff and Fallon celebrate their engagement. Sammy Jo arrives unannounced at the mansion, claiming she's come to visit her son. Mark questions Alexis' motives for destroying Blake and is reminded he's been paid to keep his mouth shut. Not satisfied with the monetary arrangement, Mark demands she submit to him sexually. Alexis orders him from Denver. A police officer arrives and announces that Mark Jennings has died after falling from Alexis' penthouse balcony.

Krystle regains consciousness and finds herself locked in the attic at Delta Rho Farms while Rita is impersonating her at the mansion. Dex is caught and tortured in Moldavia. A furious Blake learns Adam lied to him by canceling a business trip to marry Claudia. Blakecuts Adam out of his will. Claudia is upset to find Michael has been appointed chairman of La Mirage. The Colby family attends Blake's party to announce the formation of the Carrington-Colby pipeline. Blake, however, continues to question Jason's integrity. One-time lovers Dominique and Garrett Boydston, Jason's chief counsel, are reunited. From his bedroom window, Jeff spots Miles Colby arriving with Fallon.

Afraid that something may have happened to Dex, Alexis demands to be let into his room, only to find Amanda and Dex in bed together. Horror stricken, she vows to disown Amanda and storms from the room. Krystle confronts Alexis for initiating false rumors to a journalist regarding her captivity. Krystle overturns a table laden with food into a seething Alexis' lap. Galen assures Dex that he has lost Alexis forever and now she will be his queen. Alexis leaves for St. Thomas to get a divorce from Dex. Adam is dismayed to learn of Blake's plans to put Steven on the board of directors. While attending a party, Adam sees Bart Fallmont and Steven together and misinterprets it to mean something more. He immediately sets a conspiracy into motion to gather incriminating evidence against the senator. Garrett meets Jackie and after learning her age and the tragic story of having lost her father soon after her birth, Garrett suspects she might be his daughter. Back from St. Thomas, Alexis walks in

Krystle agrees to the operation only after Blake reluctantly signs her divorce papers and living will, to be enacted if the surgery is not a success. Virginia tells Krystle of her troubled youth after their mother left her. Krystle invites Sable to dinner and their friendship continues to grow. Fallon is haunted by a recurring dream of Roger Grimes. Dex hires a Vietnam buddy, Painter, to investigate Colbyco's controller. Krystle recognizes one of the caterers at her dinner party, Gibson, as the same man she sees coming out of the lake in her haunting nightmare. Fearing Krystle will put the puzzle together, Sable tells Gibson to discontinue his dives into the lake. Those are the same dives that originally uncovered the body of Roger Grimes. Thinking he has discovered an underwater passageway, Gibson is hesitant to abandon his search. Virginia reacts very strangely when she is introduced to Dex. Following the reaffirmation of their wedding vows, Blake is forced to cancel his and Krystle'

The butler, Joseph Aynders, shows Krystle that he doesn't like her, and he means she doesn't belong in the Carrington family. Krystle understands that Blake is the one who bought the necklace, to show her that he had found out. They have a little argument about this, and Krystle decides that life with Blake is impossible and leaves him. Steven tells Claudia he spent the night with Ted, but now he wants to quit his relationship with both of them. Steven and Ted are just saying good-bye and hugging each other when Blake discovers it. He gets furious, because ""the gay"" is now standing there in his house with his arms on his son. He attacks Ted and there's a fight. Ted trips, hits his head, and dies.

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.

After a twenty-year absence, Blake receives a visit from Jason Colby. Jason proposes the two tycoons build a joint pipeline. Although reluctant to do business with Colby because of his past shady dealings, Blake needs Jason's tankers to move his oil out of China. Jason confides to his sister Constance that he is dying. Jeff is surprised to hear from his aunt Constance, who insists it is urgent he come to California. Psychic Justin Dehner helps in the search for Fallon, who remains in California with Miles. Dex is furious with Alexis's growing obsession with Galen. Michael shuts Amanda out of his life. Gordon Barrett, assistant undersecretary of state, questions Blake about the revolution in Moldavia. In New York, Joel and Sammy Jo convince Rita to undergo plastic surgery to complete her transformation into Krystle's double.

Jason imposes a one-week deadline for Blake to decide on the pipeline proposition. Claudia heads to San Francisco to think about her relationship with Adam. Alexis turns to both Blake and Jason for help in rescuing King Galen. While riding with Miles, Fallon is surprised to learn she is an excellent horsewoman. Under the guise of a business trip, Adam tracks down Claudia for a romantic reunion in San Francisco. In Los Angeles, Constance Colby stuns Jeff--and enrages Jason--by awarding her nephew 50% of Colby Enterprises, worth over $500 million. When Krystle makes a surprise visit to Sammy Jo's apartment, Rita, who now appears to be Krystle's double following plastic surgery, hides in the bedroom. Jonathan Lake of the State Department tells Dominique they've met before--when she saved his life in Paris.

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.

Galen plots to regain his throne while Elena, learning the counter-revolution is in jeopardy, solicits Michael's help. A mysterious woman visits Denver to conduct extensive research on Colbyco. Carress Morell, a journalist, is Alexis' sister. Alexis, noting Blake's loss of faculties, is ready to pounce. Adam forces Blake to grant him power of attorney. Adam boasts to Claudia, but she is suspicious, and continues her attempt to prove rightful ownership of the oil well. Sammy Jo learns that Joel and Rita plan to poison Blake and flee to South America with Krystle. After much soul searching, Sammy Jo warns Steven, but it may be too late. Steven arrives at the mansion just as Blake, stricken with an apparent heart attack, falls down the stairs.

A crisis in Hong Kong sends Blake overseas, leaving Krystle to speak beside Alexis at the co-company dedication. When Alexis publicly denounces Blake's character, a vicious argument ensues and lands the two enraged women in the mud. Although Bart and Steven cannot agree about the pipeline particulars, they are in mutual accord with their affections. Bart secretly admits that he and his old roommate were lovers, not knowing that a private investigator, hired by Adam, is also privy to the information. Garrett questions a nervous Dominique about Jackie's father. His suspicions grow when Dominique refuses to answer. Alexis learns of Ben Carrington's isolated existence in Australia. With vengeance as her inspiration, she lures the recluse back to Denver, hoping to pit the estranged brothers against one another. Upon her return, Alexis receives a housewarming gift that turns her blood cold; Caress has moved in.

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.

With his reputation destroyed after the court battle with Ben, Jim Ellison, the influential Eastern money broker, refuses to loan Blake the one billion dollars needed to rebuild Denver-Carrington. Unexpectedly, Middle Eastern financial magnate Farouk Ahrned offers to loan Blake the money for a staggering fee. Desperate for the capital, Blake accepts, not knowing that Alexis is his actual creditor. Through furtive investigations, Caress discovers that Emily Fallmont was with Ben the night of Ellen Carrington's death. She quickly relates this information to Blake, and leaves with him her expose, ""Sister Dearest"" as additional ammunition against Alexis. Blake confronts Emily, who breaks down and confesses her guilt. Seeing her torment, Blake promises to fight Ben without benefit of Emily's testimony. Struggling on her own, Jackie reconsiders her rash action of running away. Returning home, Jackie is shocked to learn that Garrett is her real father. Amanda becomes more and more despondent

Feeling guilty over her cold treatment toward Amanda, Alexis rushes to La Mirage, only to find Amanda unconscious next to an empty bottle of barbiturates. Forcing the nearly lifeless girl to walk, a remorseful Alexis begs her daughter's forgiveness. At the hospital, Alexis and Blake stand over a comatose Amanda. Even as each blames the other for their daughter's suicide attempt, they reaffirm their commitment to the other's destruction. Dominique proposes to Garrett and the two make plans to marry. Steven fears losing custody of Danny if Sammy Jo marries Clay Fallmont. Caress demands ten percent of Ben's inheritance in exchange for her silence regarding Emily Fallmont. Ben agrees, but secretly arranges to have Caress extradited to Caracas. Alexis prepares to call in her one billion dollar loan to Blake to gain control of his South China Sea leases. Calling her contact, Kai Liu, Alexis schedules a meeting with the Chinese Oil Ministry. But she is yet unaware of Ben's own scheme with Liu

Adam is absolved of suspicion in the kidnapping of his son when Leslie calls him to say that Sean has taken the baby and is holding her captive. Finding the location of the call through a wire tap, Adam and Steven hurry to the desolate mountain cabin. They find Leslie badly beaten, but Sean has already taken the baby. Chasing after him, Adam and .Steven find him and get back the baby, but not before Sean is able to escape. Jealous that Jeff has fallen in love with Sammy Jo, Fallon stops by Jeff's apartment. When a heated argument turns passionate, their lust for each other becomes uncontrollable. Answering a knock at his door after he and Fallon have made love, Jeff is stunned to find Sammy Jo with champagne, ready to toast her decision to marry him. Sean returns to Alexis' apartment to kill her and take revenge for his father's suicide. Grappling with all the uncertainty in his life and Sammy Jo's current love affair with Jeff, Steven decides to leave Denver. Confident the judge will

Joanna agrees to tell Adam everything she knows about Sable, in exchange for his protection. Upon Alexis' return to Denver, Blake confronts her about the ad asking for information on Roger Grimes. She reasserts her vow to see him pay for Grimes' murder. Fearing Alexis may get a warrant to search the lake, Blake asks Dex to dive into the lake and make sure everything that needs to be hidden stays that way. Zorelli promises his commanding officer, Capt. Handler, that he will drop the Grimes case and is given his old job back. Sable is pleased when Monica moves in with her. But Sable's joy is short-lived when Alexis and Adam tell her the tankers have been destroyed. Sammy Jo offers Tanner a check for his home for runaways. She grows increasingly fond of him, unaware that he is married. Blake goes to Delta Rho to make amends with Fallon, and finds the picture Zorelli left behind. With all his faith in Fallon destroyed, Blake storms out. Dex goes to Alexis' penthouse to talk about her vende