Neville Gallagher (John Woodvine), Frank's estranged father, arrives in Chatsworth to meet his new grandchildren. While the rest of the family welcome him with open arms, Frank finds his world turned upside down, as he is forced to relive painful memories from his childhood. Meanwhile, Karen returns to Chatsworth and gets herself a job at The Jockey and soon instigates a feud with Veronica by getting too close to Kev. Elsewhere, the Gallagher house has been split in two, with Fiona and Steve having bought the house next door.

Frank takes a call at Kev and Veronica's house during their anniversary party, but only much later does he pass on the message: Social Services are coming tomorrow to discuss fostering. Kev and Veronica are shocked when they receive a child, Eric, for a trial week of foster care. Kev discovers Eric is being bullied by girls and, with Frank's assistance, he accidentally makes the situation a lot worse. Desperate to be a "good dad", Kev toughens Eric up with a series of boxing lessons - an act he may live to regret. Meanwhile, Steve makes the mistake of stealing the car of a police inspector, and it falls on Tony to get him out of trouble. Carol's latest romance with a Spanish toyboy leaves Marty on the warpath, leaving Fiona fearful that he will return to his old ways and endanger all their lives.

A garden competition sparks off a feud between Veronica and Carol, and Veronica's bitterness towards her mother alienates her friends and family, even Kev and Fiona. She is pushed further over the edge when she is uninvited to Carol's birthday party, where she overhears a shocking revelation that tears her and Kev apart. Meanwhile, Frank and his friend Tommy turn Sheila's house into a drinking den after The Jockey is closed down while she is away visiting her mother. But Frank accidentally loses one of the twins to an alcoholic transvestite called "Psycho Sally". Elsewhere, Fiona is convinced Steve is having an affair with a woman named Kerry-Anne, but the truth is worse than she could have imagined.

Preparations for Fiona and Steve's wedding are underway in the Gallagher household. In the days leading up to the wedding, Steve falls in with a group of ruthless criminals, convinced that this job will set him and the rest of the Gallaghers up for life. Things turn nasty when a vengeful Tony begins operating against Steve, and a deadly showdown at a warehouse sparks off a chain of events that changes life for the Gallaghers forever. Meanwhile, Ian recruits Mandy to be his "fake girlfriend" after Frank nearly rumbles his big secret. Carol goes on a cruise, leaving Marty in charge of her beloved dog.

When Sheila asks Lip to water her friend's plants while she is away, he begins using the house to get some peace and quiet to do homework. But when he returns one night, he discovers the house has been burgled, and he is arrested by a bent copper with a grudge to bear. Frank is called into the police station to represent him and ends up making matters a lot worse. With Lip facing a prison stretch, Fiona, Tony and Frank attempt to deal with the bent copper, while Ian, Marty, and Carl Gallagher (Elliott Tittensor) find themselves taking part in a burglary. Meanwhile, Debbie begins a VHS business, and Carl discovers a video of the local lollypop woman having an affair with another man. The video starts spreading around Chatsworth, leaving the residents wondering who the mystery man is, with the culprit eventually being revealed as local policeman, Stan Waterman (Warren Donnelly). Elsewhere, Fiona is still missing Steve, and Tony's attempts to help only make things worse for her.

Lip is sleeping with Mandy while she is pretending to be Ian's girlfriend to hide the fact that he is gay. However, after Mandy falls pregnant with Lip's baby, everyone begins to think the child is Ian's, so the Maguire family welcome him into the family with the threat of castration if he and Mandy do not marry. When Ian announces their engagement, the Gallaghers and Maguires throw a party at The Jockey, but a revelation from Lip turns the happy occasion into an evening of chaos and bloodshed. Meanwhile, Frank is left debt-ridden by Cassie Weston (Moya Brady), The Jockey's new landlady. He must come up with a way to pay back his years of free booze. Unfortunately for him, she might have just the solution. But their plan is foiled by a devious Karen. Elsewhere, Sheila cold-turkeys her tablets, leaving her convinced that the twins are monsters, while a late-night encounter with a tearaway teenager brings a new man into Fiona's life.

After Ladies Night at The Jockey, Fiona wakes up in bed with soon-to-be-married Joey Dawson, and she is forced to pay the price when Liam Gallagher (Johnny Bennett) is rushed to hospital after swallowing some pills. Social Services are alerted and a full assessment of the Gallagher family gets underway. Fiona is panicked to discover the woman in charge of the family's review is none other than her old school enemy, Katrina Webb, who also turns out to be the future Mrs Dawson, and just when it seems all is lost for the Gallaghers, an unlikely figure saves the day: Frank. Meanwhile, a visit to the hospital has devastating consequences for Ian when he discovers that Frank is not his biological father, sending him on a desperate search to find his real father. But what will he find?

After being hit in the mouth by Kash's shop door, Frank falls foul of two shifty accident claims salesmen, who persuade him to sue the Karibs. Kash and Yvonne cannot afford to pay out Frank's claims and are forced to close the shop, which enrages the Chatsworth community, who turn against Frank and Sheila. But Frank soon discovers saving the shop and the community will lead him into further trouble. Meanwhile, Fiona discovers she is pregnant, and with money at an all-time low at the Gallaghers, Fiona wonders whether she should keep it. Faced with a huge decision, Fiona tracks down Craig Garland (Chris Coghill), the father, only to discover that he is married.

Kev's sister, Kelly (Sally Carman), arrives in Chatsworth on the run from her ex-boyfriend, an aggressive junkie. She is desperate to retrieve her things from his flat, so Kev and Frank decide to step in and help her. However, Veronica soon discovers everything is not what it seems - and Kelly may be hiding a dark addiction herself. Meanwhile, Fiona is suffering from morning sickness, so Craig is planning a surprise trip to Wales to relax. Craig's wife, Sue (Gillian Kearney), is jealous of his new relationship and seeks solace in Marty. But when Sue breaks up with Marty, it leads him on a downward spiral which threatens to land him back in prison, forcing Debbie to take drastic actions. Elsewhere, tragedy strikes for Craig when he discovers his father has died.

Fiona's life is turned upside down when Steve returns to Chatsworth, on the run, to persuade her to flee to Amsterdam with him, but she is torn whether to leave her family and Chatsworth forever, not to mention the father of her baby, Craig. Meanwhile, when Lillian Tyler's (Alice Barry) husband, Brendan, is killed, Frank sees a way to make some money and also manages to win him and Sheila the trip of a lifetime. However, he is forced to look after Lillian's irritating dog, Sadie, who proves to be quite indestructible. Elsewhere, Carl makes a shocking confession during a Gallagher family bust-up: he killed Lillian's husband Brendan. Can the Gallaghers cover up Carl's shocking crime?