Tired of driving around in Howard's DeSoto, Richie and Potsie buy a car of their own. The car has several problems including an engine that won't run consistently. This causes problems when they try to impress two girls.
Richie and Potsie are invited to Potsie's cousin's stag party. In an attempt to lessen the effects of the alcohol they will consume, they each drink several cartons of milk and a sip of olive oil.
Sax and Happy follow their fortunes to Chinatown. Blue's sister shows up seeking revenge for the murder of her sons. Merry's search draws her ever closer to Very Bad Santa.
Sax and Happy go separate ways following a destructive family reunion; Merry is under investigation by Internal Affairs. Hailey and children are introduced to a far more terrifying prison.
Sax and Happy embark on lonely journey in which Sax stumbles on a new plan to negotiate for his daughter's release and Happy takes solace in the welcoming arms of another Imaginary Friend.
Finally reunited, Sax and Happy make one last push to save Hailey. Amanda pursues a dangerous lead all by herself. Blue and Isabella come to blows over a dark family secret.
With Christmas approaching, Sax and Happy are locked in a climatic confrontation to rescue Hailey from Very Bad Santa's lair as Merry sets out to save Amanda from a far more powerful foe.