After auditions in New York, Houston, Miami, and Los Angeles, the 16 contestants being considered for this season's cast were given six yards of plain white muslin, $20, and one week to create an outfit that best represents who they are as a fashion designer. After arriving, the 16 contestants find that only 14 positions were available in the Parsons workroom and thus two will be eliminated at the runway judging.

Heidi throws a roof-top party for the designers. At the party, she announces their next challenge: each must create an outfit using nothing besides the clothes he or she has worn to the party. They have one day to complete their designs.

The contestants are asked to design for a global star… Barbie. The winning designer's outfit will be duplicated for the My Scene Barbie collection. The designers have a budget of $150 and two days to complete their designs.

The remaining designers must design a lingerie line consisting of three looks. The twist is they have to do it as teams, each with a lead designer and two assistants. The designers have a budget of $200 and one day to complete their collections.

The remaining designers must each create a dress for prominent socialite Nicky Hilton. The designers have a budget of $150 and two days to complete the designs.

The designers, in five teams of two, must create a day-to-evening ensemble for Banana Republic, as well as a compelling and successful window display advertising the clothing. Each team has to finish their garment in one day.

The designers have to get sporty to create a garment for 2006 Olympic silver medalist Sasha Cohen. The designers have a budget of $150 and two days to complete the design.

The contestants have to draw inspiration from their surroundings while outside in New York. The designers have a budget of $100 and one day to complete the outfit.

Designers must create a look using only natural materials purchased in the flower district. The designers have a budget of $100 and one day to create the garment.

The designers must design a makeover look for another designer, who will then model the new look on the runway. The designers have a budget of $200 and two days to complete the outfit.

The contestants face off in the final competition before the Olympus Fashion Week finale. They must design an evening gown that will be worn by supermodel Iman. The designers have a budget of $300 and two days to complete the outfit.

In Part 1 of the season finale, the finalists return to their homes to create the line that will be shown at Olympus Fashion Week. The episode includes a look at the contestants' personal lives as Tim Gunn makes a visit to each of their homes. Back in New York, they have to complete one final challenge: each will make an additional garment that they'll design with the aid of one eliminated contestant.

In the conclusion of the finale, the remaining contestants complete their 13th look and polish the rest of their collection. Then they present their lines to industry insiders at Olympus Fashion Week.