The year begins with the birth of Mia and Samiís babies, and the baby switch storyline is set in motion. Tony overhears Nicole talking to Brady about the baby switch. He vows to tell E.J. while Nicole tries to stop him. Tony stumbles on a loose step at the pier and is impaled by a piece of wood while Philip and Nicole watch. Sami places baby Grace in the care of the nuns at the Convent. She pretends she has adopted Grace so no will find out Grace is E.J.ís baby. Sadly, Grace dies from meningitis, and Sami reveals to E.J. that Grace was his daughter. Rafe, Samiís bodyguard while she was in the Witness Protection Program, figures out that Nicole switched the babies and tells Sami the news. Nicoleís days are numbered, but Sydney is babynapped once again by Anna DiMera.
After a harrowing experience, John regains his memory, but remains paralyzed. Marlena, thrilled to have her husband back, whisks him off to Switzerland for treatment.
Nick is sentenced to prison but leaves money to Melanie and the blueprints to Max. Max and Chelsea grow closer. She finds out she is barren, but Max does not care. Chelsea moves to England to care for her mother Billie, and Max follows.
In the midst of planning her wedding, Chloe becomes enamored with the dashing Dr. Jonas, but feels that following her heart will destroy Lucas and cause him to begin drinking again. Nevertheless, Chloe gives in to temptation. Maggie and Kate find out about the affair, and while Maggie is mortified and disgusted, Kate plots revenge against Chloe. Lucas is seriously hurt in the process. Chloe has made a vow to God that if Lucas recovers, she would be faithful to him. After he recovers, Lucas and Chloe elope in Las Vegas. After their return, Chloe becomes very ill. It turns out that Kate was trying to poison Chloe and pins the blame on Daniel. Everyone catches on, but Kate marries Stefano in exchange for his help in keeping her out of prison. As the year progresses, we see that Stefano and Kate do make a lovely couple. Lucas falls off the wagon and is sent to rehab, agrees to annul his marriage to Chloe, and Daniel and Chloe move in together.
Bo is plagued by visions of the future, which causes him to thwart those events from happening. His odd behavior eventually leads to the demise of his marriage. In one of those visions, he sees Hope shooting Kayla. This does in fact happen, and while it was mentioned that Kayla recovered from the bullet wound, it is the last time we saw Steve and Kayla in Salem. Hope is furious with Bo for not forewarning her about the vision. However, shortly thereafter, a deranged officer Dean seeks revenge on Hope because she was promoted on the force and he was not. He kidnapped Ciara in exchange for ransom money. Eventually, Dean and his cohorts were killed and Ciara was unharmed. The ordeal put more strain on Bo and Hopeís marriage and Hope moved out. She first left for a secluded area, but then moved in with Victor. In the meantime, Carly Manning kills her husband Lawrence because he was going to kill her daughter from a one-night stand, and flees to Salem. She seeks protection and comfort from Bo, which does not help his marriage.
All year, Melanie has been playing a cat and mouse game with Philip. He and Stephanie were going to be married, but his shady dealings and fascination of Melanie send Stephanie running the other way. Nathan Horton, Melissaís son, comes into town and his arrival causes Melanie a bit of fickleness. She wants to be with Nathan, but cannot seem to stay away from Philip. Nathan will not play her games and dumps Melanie for Stephanie. On the rebound, Melanie impulsively accepts Philipís proposal of marriage. She is clearly caught between wanting to be like Alice Horton and Nicole Walker!