The major storylines this season involve Eric and Donna's close friendship turning into romance, Red struggling to provide for his family due to his hours being cut back, Kitty dealing with her children growing up and trying to be everyone's mom, Kelso's relationship with Jackie (and his frequent attempts to break up with her), Fez learning about life in America, Hyde's rough home life and strained relationship with his mother, and Bob and Midge beginning to have marital problems.

Red gives Eric $40 to buy a Christmas tree, but he, Hyde and Kelso cut one down along the interstate and keep the money for beer and presents.

On January 13, 1977, Kelso makes out with campus chick Pam Macy, causing Jackie to dump him.

Kelso tries to understand his father's (Francis Guinan) profession, and Jackie and Red bond over fixing the Vista Cruiser.

Red is also at a loss on how to cope with his mother's death and is embarrassed by his emotional brother Marty (Pat Skipper), who comes to the funeral.