Since Sloane killed his wife at the end of last season, he is made a full partner in The Alliance and given an injection of something. He is then blackmailed by someone who apparently has his wife, still alive.

Sydney's friend Francie is opening a restaurant, while her other friend Will begins to do research work for the CIA.

Sark is now running Irina's operation and is Sydney's new arch-enemy. Sydney begrudgingly works with her mother, who gives her father some very pointed hints that Irina might spill the beans on what he did to Sydney after Irina disappeared. Jack then turns some good information from Irina into a trap so that the CIA will keep Irina away from Sydney. Vaughn, in a power-struggle of his own with Jack, discovers proof of the frame-up. Sydney also stumbles onto an operation to train children as sleeper agents and puts enough information together to realize that she was herself trained as a spy by her father years before. Now she cannot trust her mother or her father, but when all the stories come out, Sydney kidnaps a Senator and convinces him to drop the charges against both of her parents by lying to him.

At the same time, Sloane has verified that his wife is still alive by digging up her empty coffin. He is at first defiant to the blackmailer, but after he receives his wife's ring finger — with the wedding ring attached — the next blackmail attempt is more serious, and Sloane works with The Alliance to arrange to meet the demands.

Vaughn ends in the hospital dying of a virus for which Irina is responsible. In the process of trying to save him, Sydney makes a deal with Sark and delivers Sloane to him in exchange for the antidote. Rather than killing Sloane as he had said he would, Sark takes the opportunity to form an alliance with SD-6. Vaughn tries to declare his love to Sydney, but is repeatedly frustrated in his efforts, and when his girlfriend's father dies, he stops trying, but only for a while.

The creations of 15th-century inventor Milo Rambaldi are still the primary focus of most missions. One artifact apparently provides the secret of eternal life, and is demonstrated by a 600-year-old flower, still in bloom.

The investigation of Sloane's wife's reappearance and the subsequent blackmail is pointing to Sydney's father. While that is a frame-up, Jack does obviously have many secrets, and he fears them coming out. The investigation also turns up the suggestion that Sydney is a double-agent. Fortunately, Jack discovers evidence that points to the person conducting the investigation as the actual blackmailer, which ends the suspicion on him and Sydney.

Irina thinks that the evidence Jack discovered was itself a frame-up, and in episode 12, when Sloane manages to deactivate the tracker that The Alliance injected into his neck and meets up with his wife, we find that this is true. Sloane is now with his wife and has the money that was blackmailed from The Alliance.