Dan finds himself between two girls when his childhood friend, Vanessa, returns to N.Y. and declares her feelings for him, just as he and Serena are trying to figure out what they mean to each other. At the masked ball, Blair sends Nate on a scavenger hunt, but Nate is distracted by his feelings for Serena. Although Blair said that outsiders were not welcome to the party, a disguised Jenny and Dan sneak into the ball. Finally, Lily asks Rufus to accompany her to an Eleanor Waldorf event only to make Bart Bass jealous.

Serena and Dan finally accept that they are crazy about each other, despite that they come from polar opposite worlds. Chuck thinks of investing in a club trying to make his father Bart Bass proud of him. Nate confronts his father, about the drugs he found in his house but he denies having a problem. Jenny discovers a secret that her parents have been keeping from her. Finally, Blair is devastated by Nate's actions when Jenny reveals that Nate kissed her by accident thinking she was Serena.