A flood of new recruits arrive at Baywatch to try out for rookie school, who include Hobie, Manny, and newcomers; Lani McKensie, a part-Hawaiian, part-Caucasian wanting to be a professional dancer, April Giminski, a naive, design major college student unfamiliar with swimming in the ocean, and Skylar Bergman, April's roommate who wants to become a paramedic.
During the second week of rookie school, April is injured by a bump on the head caused by a mysterious wave runner rider which harasses her, Lani and Skylar and nearly causes her to be thrown out of rookie school. After visiting his home neighborhood, Manny becomes more determined to become a lifeguard than anything else.
Veteran lifeguard John "J.D." Darius arrives at Bayside and competes with Taylor Walsh, an attractive newcomer, for Mitch's old job as lieutenant and Mitch must make his own decision as to which one will be the most eligible one for his former job. Although J.D. has more experience as a lifeguard than Taylor, he is plagued by haunting memory of failing in a rescue at Daytona Beach where he worked some years ago.
On Memorial Day weekend, Mitch, April, and Skylar find a lot of problems on their hands after discovering the dead body of an elderly Navy veteran whose two elderly Navy buddies of his want to give him a proper burial in the ocean.
April's mother and her 12-year-old younger brother, Charlie, arrive for a visit where Mitch and Hobie try to make the best of the weekend with Charlie who is revealed to be dying from a rare form of cancer that April refuses to accept.
A sleazy TV reporter, called Roger Riptide who flies around the beach in a helicopter, starts dishing dirt on the private lives of the Baywatch lifeguards for his TV show much to the irritation of Mitch and Taylor, who suspect someone is leaking information to Riptide.
While strange earth tremors plague the area, Mitch tries to get Jordan to meet her real biological mother on a fishing outing, who turns out to be a white woman named Rene, who's dying from a brain disorder and thinks the problem is hereditary. But things take a turn after a massive rouge wave, triggered by an underwater tremor, capsizes the fishing boat and traps Rene below decks in a room with toxic fumes.
The hot Santa Ana desert winds stir up more troubles for the Baywatch lifeguards when a typical day begins with a large hole appearing on the beach, as well as an uncharted sand bar, the lifeguard trucks disappearing and then reappearing buried in the sand. Also, mysterious deaths of sea lions point to a giant electric eel living in the Zuma Beach caves.
Mitch is reunited with his old Baywatch lifeguard friend, Craig Pomeroy, now a full-time lawyer who's in town trying to honour a Native American's dying wish to die peacefully on sacred Indian grounds at the beach.
Cody becomes consumed with guilt when his actions of leaving his post before the end of his shift to go on a date with Lani result in the disappearance of a young Latino woman swimming in the ocean, and the incident results in a hyped media circus that comes to the beach to cover the story.
Caroline Holden returns to Baywatch during a break for her soap opera role in New York, which takes an unexpected turn when she is taken hostage by an armed robber which fills her with paranoia and fear for days after.
After learning of Manny's ethnic prejudices originating from the Latino street gang that he used to hang out with, as well as from his mother who also may be prejudice at her son dating a Caucasian girl, an irate April joins Craig on a diving expedition that takes a turn for the worse.
After Mitch saves a young girl on the beach from a live grenade, he and Cody investigate a sunken ship containing a cache of smuggled weapons where Cody is trapped in the hull of the ship 75 feet on the ocean floor after he and Mitch are taken hostage by a pair of arms smugglers looking to retrieve their arms shipment.
After breaking up with Manny, April sees romance on her mind with Craig, who is experiencing a mid-life crisis over leaving his wife. April asks a reluctant Craig to attend a formal dinner party with her prompting him to seek out advice from Mitch over the situation he is in.
Mitch meets Jenny Wade, a horseback riding instructor who rides on the Malibu beach everyday on her race horse, Max. Struck with love, Mitch engineers a picnic date with Jenny using a variety of circumstances, including encouraging Hobie to take one of Jenny's riding classes.
Mitch's old policeman friend, Garner Ellerbee, returns where he recruits Mitch's help him bust a drug smuggling ring after a lifeless dolphin washes up on shore, and they end up putting Neely in danger when she willing agrees to place a tracer on a yacht of a shady man from the beach club she is life guarding at.
After a grudge motorboat race between April and Jordan, against Cody and Newman, Cody gets trouble when he uses Mitch's boat as the ante in a bet with a pair of local rich snobs in a more powerful motorboat race. When Cody becomes incapacitated after spraining his knee, Mitch steps in and soon discovers the true nature of the game with the men he and Newman are playing with.
A long bad day begins when after Mitch rescues a struggling swimmer, the local Disease Control Center places the entire Baywatch Headquarters under quarantine after the swimmer shows symptoms of a deadly virus.
Mitch rescues a troubled young woman, named Sara, from her boat after it catches afire after which she charms Mitch and gets his mother, Irene, to hire her as a nanny for Neely's baby, Ashley. But Mitch gets concerned when Sara quickly develops a dangerous obsession with him and tries to win his affections at any cost. When Mitch lets Sara down, she immediately shows her true colours and plots to make Mitch's life a nightmare.
In this three-part season final, Neely, Donna and Lani are chosen by the sports magazine 'Inside Sports' for a week-long trip to Alaska on the cruise ship Dawn Princess, where Neely tells Mitch she is thinking about visiting her ex-husband who lives in Juneau to reconcile with him. But things change when Hobie wins a contest for the same Alaskan cruise for him, Mitch and Cody to travel to Alaska as well.
On the Dawn Princess, Mitch and Cody surprise Neely and Lani by showing up where Cody tries to stay close to Lani during her photo shoot aboard the ship.
Gavin chases Leslie and Hobie up a mountain and through the skies in para-gliders right to a glacier where a standoff takes place with Leslie and Hobie trapped in a glacier gorge with Gavin above them, while Mitch and Cody follow close behind.
