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.

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.

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.

Blake learns about Krystle's ""pawning"". He doesn't tell her, but he starts frightening her with hints. Jeff now knows that his marriage to Fallon is only a part of a deal, and he does everything to embarrass his wife. Especially during a birthday party Blake throws for Cecil, when he yells out to everybody what he thinks of them. Ted still tries to get into Steven's life again. Matthew manages to pay the money back to Krystle, and she wants to buy her necklace back, but the pawner has already sold it.

The big, wealthy oil tycoon Blake Carrington and his former secretary, Krystle Grant Jennings are getting married. Krystle's ex-boyfriend, Matthew Blaisdel, who's been working as a geologist on one of Blake's oil rigs in the Mideast for a year and a half

Matthew gets a little visit from an old acquaintance, Walter Lankershim. Walter asks for money, because he's in trouble. He's lent money from Blake to drill for oil, but he haven't made any strikes. Matthew refuses to give him any money. Matthew goes to visit his present wife, Claudia, who's been in a mental institution for 18 months, but he learns that she's much better, and she's been released. Matthew, Claudia and their daughter, Lindsay, decides to start over again as a family. Blake and Krystle get to talk about their disagreements, and starts planning a big wedding. There's an accident on Walter's oil rig and he finds out that somebody has been sabotaging. He's convinced that Carrington has something to do with this.

Blake and Krystle finally get married. Blake talks a bit with his son about the homosexuality. There's a big wedding at the mansion, and among the guests are Cecil Colby and his nephew Jeffrey Broderick ""Jeff"" Colby. Cecil is a big oilman like Blake, but he's much bigger, and Blake's company, Denver-Carrington, is just a newsstand compared to Cecil's ColbyCo Oil. Walter blurs into the big wedding, furious about the sabotage on his rig. He and Blake fight about this, and Matthew takes Walter's side in the fight, which leads to Blake firing Matthew.

Matthew finds the guy who really sabotaged the rig. Steven is offered his job back, but turns it down. Claudia learns about Matthew's relationship with Krystle. Lindsay is upset, thinking that her parents HAD to get married just because of her when she was born. Steven's boyfriend Ted tries to contact him, but Fallon does everything she can to stop it and keep them apart. Blake finds out that Krystle is on birth control pills and assumes she's not interested in having a baby. He gets both mad and drunk and forces Krystle to a rough sexual intercourse.

Blake apologizes to Krystle about his behavior, and she forgives him. Michael has found out about Krystle's pawning and tells it to Fallon. Matthew and Walter finally strike oil. Claudia goes out with a guy she meets and almost has an affair with him. She manages to pull out, but later she has an affair with Steven. Lindsay starts finding out about it.

Jeff comes home after being in the Middle East, but he and Fallon have lots of arguments. Steven decides to get some more education and to start working for Blake, and he moves to his own apartment. Blake finds out about Michael's relationship with Fallon and hires some people to beat him up. Lindsay finds out everything about her mother's affair, which is still going on.

Blake and Krystle have to break off their honeymoon, because Blake's in a bit of a crisis at work, and he has to go home to do business. Walter gets in trouble with the workers on his rig, but he gets it all straightened out, and both Matthew and Steven get a job there. Blake doesn't like this. Krystle has problems getting along as a wealthy woman, with all the servants and the money. Matthew and Claudia fight alot, they both think it's difficult to start this new life. Cecil and Fallon have negotiations of their own. Cecil is going to help Blake out of his problems, if Fallon marries Jeff.

Blake apologizes to Walter and Matthew about their fight at the wedding and asks Matthew to come back to his old job. He also invites them to a dinner party at the mansion. During the dinner, many things happen; Steven and Claudia meet and get along really well, Matthew has a long talk with Krystle and tells her that he's still in love with her, and Cecil and Fallon start realizing their plans. Cecil offers to help Blake and Fallon starts hitting on Jeff.

Michael still tries to win back Fallon and tells Blake about Cecil and Fallon's agreement. Blake and Fallon argues about this. Steven is taunted on the job for being gay. Lindsay has a boy over to study, he tries to put the moves on her and she gets upset and runs off. Blake wants to have a child with Krystle. Matthew invites Steven to a dinner party at his house. In the end Steven and Claudia secretly start kissing.

Cecil helps Blake with his money problems. Jeff and Fallon get married. Blake's driver, Michael Culhane, who's been sleeping with Fallon, is a bit jealous, because she won't take him anymore. Blake hires him to do undercover work for Denver-Carrington, and he starts flirting with Cecil's secretary. Blake warns him about being unloyal. Steven gets a visit from his gay friend, Ted Dinard, from New York.

Walter takes Steven to a bordello to try to ""straighten him out"". Something goes wrong at Matthew and Walter's rig, Steven is blamed for sabotaging, and though he's innocent, he looses his job. Blake's plan now is to take Walter and Matthew's rig when they're in trouble. Krystle doesn't like Blake's methods in his work. She pawns an emerald necklace and loans Matthew the money to help him. She makes a false copy so Blake won't understand it's gone. In the end, Matthew and Krystle kiss, but Krystle breaks it off and leaves.