Following a serious traffic accident, Fallon mysteriously vanishes. Dex and Steven bail Alexis out of jail. Sammy Jo attempts to seduce Adam. Alexis flatters Adam by suggesting he work with her defense attorney, Warren Ballard. Dominique's husband Brady arrives at La Mirage and finds his wife suddenly interested in staying in Denver. Steven accuses his mother of killing Mark Jennings and ruining Blake's business. Despite her pleas, Steven tells his father everything. Steven orders Sammy Jo from the mansion. She counters by promising she'll sue for custody of Danny. After duping Adam into letting Danny ride along with her to the airport, Sammy Jo dashes off, kidnapping her son.

Steven accuses Adam of conspiring with Sammy Jo to kidnap Danny. Blake arranges to take out a mortgage on the mansion. He little suspects Alexis has signed the note and will become the owner if he defaults. A cross-country search for Fallon has developed few leads. Warren Ballard and Adam prepare Alexis' defense. Dominique Deveraux makes her singing debut at La Mirage, with Blake and Krystle in attendance. Krystle quickly senses Dominique's hostility toward Blake. Brady declines the Carrington's hospitality as well. Jeff finds a truck driver who gave Fallon a lift to Portland, Oregon, the night of the accident.

To secure financing for his bankrupt company, Blake arranges to see Billy Waite, a notoriously underhanded oil man. Jeff continues his search for Fallon. Impatient with the progress her lawyer is making on her defense, Alexis fires Warren Ballard and retains Adam. Alexis visits Billy Waite in South America under the guise of concern about Blake's misfortunes. As she prepares to leave, the police arrive. She is arrested for fleeing to avoid prosecution and led away by the police. At an isolated religious retreat, Jeff learns Fallon is dead and that she died along with Peter DeVilbis.

In Seattle, Jeff and Blake learn the woman who died in the plane crash with Peter DeVilbis cannot be positively identified, but the ring she was wearing is indeed Fallon's wedding band. Jeff creates a scene at Fallon's funeral. Steven meets Sammy Jo in Los Angeles, where she demands payment of $3O,OOO per month for Danny's return. After Claudia points out his behavior only isolates him from the family, Adam is moved to action. Adam breaks into Sammy Jo's motel room and retrieves little Danny.

Blake visits Dominique at La Mirage to discuss her recent revelation. She tells Blake that her mother was a long-time mistress of his father and has evidence to prove it. At Alexis' trial, a neighbor offers powerful evidence that incriminates Alexis. Along with Mark, she saw a woman on the terrace wearing a cape that has been positively identified as Alexis. Blake is called to testify and states that Alexis would indeed commit a violent act if sufficiently provoked. In a dramatic courtroom scene, Steven is called to the witness stand and he must tell what he knows or protect his mother.

On the witness stand Steven testifies he saw Alexis push Mark to his death. Furious, hurt, and still claiming her innocence, Alexis disowns Steven. Dominique offers Blake $25 million for control of his company. Stunned, Blake offers her 40% of Denver-Carrington for $30 million. Jeff sees other women in an attempt to forget Fallon, but remains obsessed with his ex-wife. Dismissing her attorneys and deciding to represent herself, Alexis takes the stand and testifies she was not wearing the cape that incriminated her. The prosecution, however, proves it had been delivered to her and was found stuffed in a trash bin behind her building. The verdict is at last delivered: Alexis is found guilty.

Adam and Dex vow to prove Alexis' innocence and begin a determined campaign. The woman who testified she had seen Alexis on the terrace with Mark had hosted a party that evening and snapped photographs. The negatives reveal it was Neal McVane who had framed Alexis for Mark's murder. Alexis is freed. Denver-Carrington is back in business. Alexis vows revenge on Dominique when she learns of her new partnership with Blake. Brady is stunned to learn of Dominique's true relationship with Blake. Upon returning home, Alexis receives a visit from a beautiful young woman named Amanda. She is Alexis' daughter.

Amanda insists Alexis acknowledge their relationship and begs her to reveal her father's identity. Alexis tells her it was simply an anonymous ski instructor in Gstaad. Steven and Alexis reconcile and he rejoins Colbyco, where Luke Fuller, an attractive young man, has just been hired as public relations director. Claudia enters Steven's office to find Luke straightening her husband's tie. Amanda goes public with a front page story announcing she is Alexis' illegitimate daughter. Jeff meets an attractive young widow, Nicole, whose late husband was Peter DeVilbis.

Amanda insists Alexis acknowledge their relationship and begs her to reveal her father's identity. Alexis tells her it was simply an anonymous ski instructor in Gstaad. Steven and Alexis reconcile and he rejoins Colbyco, where Luke Fuller, an attractive young man, has just been hired as public relations director. Claudia enters Steven's office to find Luke straightening her husband's tie. Amanda goes public with a front page story announcing she is Alexis' illegitimate daughter. Jeff meets an attractive young widow, Nicole, whose late husband was Peter DeVilbis.

Krystle goes into premature labor and delivers a baby girl, who suffers from respiratory problems. She names the child Kristina after a friend who once saved her life. Claudia is uneasy when Steven accompanies Luke on a business trip. After confiding in Dean Caldwell, he moves to hug her, and the two are soon in a passionate embrace. Amanda overhears Dex tell Alexis to stop hiding the identity of Amanda's father. Jeff finds a photo of Peter DeVilbis in Nikki's hotel room.

Upon learning that he may be Amanda's father, Blake resolves to ask Amanda to take a blood test. Nicole tells Jeff there's a chance Peter DeVilbis may have been with another woman at the time of the crash. Under the pretense of a family outing, Alexis arranges to send Dex and Amanda to a ski lodge. With the tension growing between them, Amanda and Dex begin to fight. Their fury, however, soon turns to passion. Alexis finally arrives and announces the three are bound for London, where she and Dex will marry.

Blake buys back his racehorse Allegre from owner Daniel Reece, who sends Krystle a gift. Furious, she demands to know how he dare approach her after what happened with her sister, Iris. Amanda learns she is Blake's daughter. Blake, meanwhile, has contacted his father, who claims that Dominique is not his daughter. Claudia confesses her affair with Dean Caldwell to Steven.

Krystle reconciles with Daniel, who reveals that his break-up with her sister was amicable. Dominique, bitter over Blake's continued refusal to acknowledge her as a Carrington, considers a number of alternative courses, including a generous offer from Alexis for her share of Denver-Carrington. Claudia moves into La Mirage. Krystle confides to Steven that Daniel is Sammy Jo's father and therefore little Danny's grandfather. Jeff and Nicole find the missing piece of a map that DeVilbis and Fallon had shared in the hope of finding buried treasure. Blake's father suffers a heart attack.

Claudia rebuffs Steven's conciliatory attempts. Tension between Dex and Amanda continues to mount. Baby Kristina is allowed to leave the hospital. Jeff remains intent upon his mission to find Fallon with the help of Nikki, who has fallen in love with him. On his deathbed, Tom Carrington makes amends with Blake, and in a final dramatic gesture, has his will changed. His vast estate is to be divided among Blake, Alexis, and his acknowledged daughter, Dominique, whom he names as executor.

Krystle begins working with Daniel. Blake is adamantly opposed and exchanges harsh words with Reece. Dex is furious with Alexis for traveling to Sumatra to see Blake's father. Alexis learns from Amanda of Dex's experience with Daniel in Vietnam. Jeff and Nikki follow the treasure map to a remote jungle location and find a statue filled with jewels, as well as a woman who has been impersonating Fallon. Jeff awakens the following day and learns that while celebrating, he and Nikki were married.

Krystle launches her new business with the purchase of an Arabian horse. Sexual tension between Steven and Luke mounts. Jeff and Nikki return from Bolivia with the news of their marriage and they move into the mansion. Alexis is intrigued with Blake's recent meeting with a delegation from China. It was arranged by Lady Ashley Mitchell, an internationally known photojournalist and widow of a wealthy British lord. After Lady Ashley and Blake enjoy a lovely dinner together, she impetuously kisses him.

Blake returns triumphant from his negotiations with the Chinese. Alexis vows to buy into the venture. Krystle, uncomfortable with Daniel's increasing attention, avoids him. Blake, absorbed in his business, is distracted by Lady Ashley. Steven's on-going affair with Luke ends abruptly when he decides to return to Claudia. Blake invites Amanda to accompany him on a business trip to Acapulco. Alexis learns of the trip and invites herself and Lady Ashley.

Alexis attempts to persuade the head of the Chinese delegation to hire Colbyco. Blake is surprised to learn Lady Ashley is an Acapulco. Amanda has a romantic fling with Prince Michael of Moldavia. Claudia meets with Luke, asking him to honor Steven's request that they remain apart. Krystle makes a surprise visit to Daniel, who hurriedly hides maps and plans detailing a secret military maneuver. While riding, Krystle is thrown from her horse. Relieved she is unhurt, Daniel kisses her passionately.

Amanda spends the night with Prince Michael and then is heartsick to learn he is engaged. Dex persuades the Chinese delegation to use his company instead of Blake s for an important drilling job. Alexis offers Blake a generous deal in the South Seas. Although suspicious, he accepts. After Claudia spots Steven and Luke at a restaurant, she finally accepts Adam's advances. Dex decides to accompany Daniel on a top-secret military maneuver. Daniel confesses to Krystle he's been in love with her for years.

Tensions between Krystle and Blake mount as their suspicions of one another grow. Claudia regrets sleeping with Adam. Dominique derails Alexis' attempt to buyout her company, but is unable to stop Brady's divorce proceedings. Alexis hires a private detective to investigate the circumstances surrounding Jeff's marriage to Nikki: She learns the girl fabricated the marriage license and deluded Jeff into believing he had married her while drunk. Jeff confronts Nikki, who confesses and leaves the mansion. Dominique is suddenly seized with a violent cough and drops to the floor, unconscious.

Dominique remains in critical condition after collapsing. Luke pays an unexpected visit to Steven. Blake tells his son that he will support him regardless of his sexual persuasion. Krystle and Ashley exchange heated words. Dex returns from his secret mission quite ill, and in his feverish raving, he calls out for Amanda. Alexis calls her former lover, King Galen, a Middle Eastern monarch and Prince Michael's father. She wants to make a marriage match for Amanda and Michael.

Alexis attempts to persuade King Galen to allow a marriage between Amanda and his son. She sweetens the offer by suggesting his country would receive a portion of Colbyco's revenues. Finally, she takes him to bed. Steven tells Claudia that although he still loves her, he is now certain he also loves Luke. Dominique advises Krystle to reconcile with Blake or risk losing him to Ashley. Lady Ashley impulsively kisses Blake and the moment is photographed and sent to Krystle.

Alexis is relieved and Blake is concerned when Amanda suddenly changes her mind and decides to marry Prince Michael. Sammy Jo is revealed to be the culprit behind the compromising photographs. She realizes the scheme to split them apart is useless until she spots a woman who bears an uncanny resemblance to her aunt. Blake returns to the mansion after spending the evening with Ashley, and is surprised to find Krystle has cancelled her planned business trip. Krystle, hurt by what appears to be Blake's betrayal, immediately takes the baby and leaves the mansion.

Claudia flies to Mexico to divorce Steven. Unexpectedly, Adam appears at her hotel and they spend the night together. After Amanda embarrasses Prince Michael at Dominique's party, his patience is exhausted and he leaves her. Jeff's infatuation with Ashley grows. Dex rescues Daniel, who goes immediately to see Krystle. Relieved he's alive, she embraces him and he misinterprets her affection. Blake is enraged. While airborne with Daniel on a private plane, the men fight and knock the pilot from the cockpit, throwing the plane out of control.

Blake and Daniel survive the plane crash. Jeff charters a helicopter and braves hazardous conditions to finally locate the wreckage. Dominique warns Ashley not to jeopardize Blake's marriage. Krystle and Blake finally clear the air and renew their commitment to each other. Amanda reconciles with Prince Michael, and the wedding is back on. Krystle visits Daniel and tells him he is the father of her sister Iris' baby, Sammy Jo.