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Caruso's landlord threatens to turn the coffee house into a parking lot unless Bruno gets his young opera singer friend accepted into the School of the Arts. Meanwhile, Mr Shorofsky has a secret meeting with Mrs Berg.

When Dwight shows up to school with severe bruises on his body, Danny appoints himself as Dwight's bodyguard when he, along with the rest of the school, believe Dwight is a victim of bullying. Meanwhile, Miss Grant is not pleased when rumored drug trafficking brings an undercover cop to the School of the Arts, posing as a dance student.

Danny enlists Christopher and Michael to coach rival gangs in a "break dance" competition. Meanwhile, Doris has trouble ridding herself of "Snake," a gang member who has a crush on her, and Coco, inspired by Bruno's life out of school, contemplates leaving the School of the Arts to pursue her career.

When Mr. Morloch announces that all students participating in any school production must have a minimum C average, Ms. Sherwood, despite Morloch's objections, assigns Leroy and Danny the responsibility of teacher, leaving Danny forced to make a tough decision when he suspects a friend has cheated.

Love is in the air as Bruno unwittingly falls for Lisa Connors, a student-teacher for Mr. Shorofsky, and Morloch expresses a romantic interest in Ms. Sherwood.

Changes abound with the start of the new school year: Bruno, with no means of funding his schooling after his father dies, is forced to drop out; Coco, Danny and Doris find out that even though her mother still lives in New York City, Julie is married and now living in Texas; new students Christopher Donlan, a dance major, and Holly Laird, a drama major, find difficulty in being accepted, most notably by their more seasoned competition, Leroy and Doris, and new vice-principal, Quentin Morloch, intends on ruling with an iron fist.

Mr. Shorofsky finds Bruno a job as a waiter at "Caruso's," a coffee house where he is free to play his music. After settling their feud with a fist fight, Leroy works with Christopher to improve Chris' dancing skills after Miss Grant decides to downgrade him to a different class.

Leroy wants his mother to come in for parents' day.

Doris, while pretending to be a hooker, meets a real hooker named Tracy, and tries to help her out.

Budget cutbacks prompts the School Board to fire one of the dance school's teachers.

Doris learns that sometimes honest is not always the best policy. When Shorofsky is hospitalized, Bruno realizes that he is important to his life.

Danny's father does not agree with his choice of being a comedian.

Bruno's script is chosen to be produced by the school and he is given the chance to be a voice in the audition process. Unfortunately he can't make up his mind who is better and if someone isn't as good he (with his soft heart) feels the need to let the person try again, to give them that extra chance to get it right. All his friends are excited that he can choose who will star in it, because of course, they want it to be them. Things start to heat up after everyone finds out that Bruno cast himself in the lead. After which he enlists the help of Doris to teach him to ""act"". Doris begins to fall in love with Bruno.

After it comes to light that Jesse is an illegal alien, the staff and students at the School of the Arts band together and fight to keep him from being deported.

Doris alienates her friends when she becomes obsessive over the planning of this year's "Friendship Day". Bruno's father and Julie's mother mistakenly believe that Bruno and Julie plan to have sex.

When Bruno gets the chance to audition for Julliard, he finds himself caught between the desires of his father and Shorofsky. Shorofsky feels that Bruno isn't ready for Julliard yet. During the audition, Bruno chooses to play his mother's favorite song instead of the piece he originally chose, even though he knew it would destroy his chances of being accepted to Julliard.

Coco tries to impress a producer with an audition in a diner. She manages to get a screen test, and tells the gang it all went well. Later she comes clean and admits she was terrible. Doris tries to loose weight and be perfect (like Coco) and collapses in Miss Sherwood's class. In telling Doris the truth about her screen test, Coco manages to come to terms with herself.

Troy Phillips falls in love with Julie. When they fall asleep studying, he tells everyone that they slept together but he didn't realize what he was telling everyone was being taken in the wrong way.(Inspiring Bruno's classic line, "You're supposed to be tutoring him on the joys of harmony, not sex!") A picture of Mr. Reardon is printed in a gossip tabloid magazine by a "so called" friend of Reardon's who will do anything to sell a story, even steal the photo from David.

This episode is comprised of excerpts from the Kids from Fame live concert at the Royal Albert Hall, London.

When Christopher is challenged to a boxing match by Keach Howard, the last man he defeated, and refuses to fight, Keach beats up Dwight in an effort to make Donlan change his mind. Meanwhile, Leroy becomes a mentor to Billy Hall, a fellow dancer in Miss Grant's class in whom Leroy sees a lot of himself.

When Doris' ex-boyfriend, Sandy Gordon, who was expelled for his drinking problem, is allowed readmission into the School of the Arts, she's overjoyed until she learns that he was hiding his continuing battle with alcoholism from her.

When Doris tries to get her classmates to do a production of the reputedly haunted play, "The Gypsy Queen," she and Miss Grant are convinced that they have seen a ghost. While trying to obtain a better understanding of the occult, they discover that Mrs. Berg is a "spirit medium."

Lydia teaches a blind substitute teacher to dance. Doris developes a crush on the substitute teacher, Jim Hamilton.

Doris falls in love with a singer she meets at a dance club where her, Bruno and Leroy go to observe the country western scene. They are looking to make a "unique" version of Romeo and Juliet for dance class. Bruno dates a 30 year old woman he meets at the same club. Sherwood meets someone through a dating service.

Shorofsky and Bruno both promise a show's dress rehearsal to different people. Doris is worried that her grandmother may move into her parents' home.

Doris is auditioning to star in a show. She falls and bumps her head and has an elaborate dream sequence in which she is on a quest to become a star. The school campus is set up with a ""yellow brick road"" path ""Dottie"" must follow and encounters several interesting characters (her fellow classmates in costume) along the way. Debbie Allen (the dance instructor/choreographer) plays the ""good witch"" and Mrs. Sherwood is the ""wicked witch.""

Coco tries to get long with a learning disabled student.

Julie's dad is getting remarried, and Julie does not like it one bit. Also, Leroy tries out for a touring dance troupe.