In this sequel to 'The Last Picture Show', set in the small town of Anarene, Texas, in the summer of 1984, Duane Jackson (Jeff Bridges) sits in his hot tub shooting at his dog "Shorty's" doghouse. Later, with Shorty at his side, Duane drives his pickup truck to his oil company headquarters. Office manager Ruth Popper (Cloris Leachman) brings him up to date on bills and payments. Duane receives a telephone call from banker Lester Marlow (Randy Quaid), who laments that his wife, Marylou, left him. He wants Duane to talk to her, and Duane predicts he will see Marylou that evening at the Old Texas Centennial committee meeting. Ruth comments that Marylou Marlow's departure adds yet another "footloose" woman to the town's population, which includes Suzie Nolan, "Junior" Nolan's wife.As Ruth gives Duane a bank check to take to Lester, she suggests that he visit Jacy Farrow (Cybill Sheppard), his former high school girl friend, who is back in town after many years, grieving for a dead child. Duane drives past Anarene's old movie theater, which is falling down after 30 years of neglect. As Duane arrives at the Dairy Queen restaurant, Lavelle Bates (Kay Pering) and Charlene Duggs (Sharon Ullrick) agree that he still looks good despite his weight gain since his high school football days. He sits down with Junior Nolan (Earl Poole Hall) and other friends to talk about sex and the falling price of oil, which has turned their boom into a bust.Sonny Crawford (Timothy Bottoms), town mayor and owner of the Kwik Sack supermarket, tells Duane that Jacy, the girl they shared in high school, stopped by his store and still looks good. Karla Jackson (Annie Potts) walks in as Charlene lays her hands on Duane's shoulders. Charlene pulls away and leaves with Lavelle.A telephone call from the sheriff informs Duane that his son, Dickie (William McNamara), was arrested again for speeding. Duane drives past Jacy's house, but does not stop. After visiting his oil rig to get his men working, he drives to the jail and takes custody of his son.Approaching the Jackson home, Dickie sees his fiancee Billie Anne's truck outside and tells his father he cannot go inside, because she knows he has been sleeping with Suzie Nolan and Marylou Marlow, the wives of Junior and Lester. Dickie takes the wheel and drives away in Duane's truck.In the back yard, Duane finds Karla, Billie Anne, and Minerva, the Jackson family's African American housekeeper, firing guns at balloons. Duane and Karla's daughter, Nellie, and grandson "Little Mike," are also there. Karla tells Duane that Lester Marlow is in the hospital after a suicide attempt, and Junior Nolan was seen buying ammunition. At that moment, Junior arrives with a rifle, looking for Dickie. Billie Anne chambers a round in her rifle, but Duane convinces them both to lay down their weapons. Junior realizes he is hungry. He and Karla decide to eat at the local Dairy Queen, while Duane goes to the centennial meeting.The first order of business is whether to celebrate Archer County's first town, Texasville, by building an Old West replica, but the Reverend G. G. Rawley shouts them down because Texasville consisted of nothing but saloons and whorehouses. Over the preacher's objections, the committee votes for a small Texasville facade on the courthouse square during festivities.When Duane visits Lester Marlow in the hospital, Lester wonders if he will be raped in prison, but Duane assures him he will receive community service or a short term in a "country club prison." Lester worries about what Marylou does at night.Suzie Nolan, high on cocaine, confronts Duane as he leaves the hospital and cries that his son, Dickie, does not love her. She drags Duane into her car, but before they can have sex, a woman drives up and tells them her father, "Old Man" Bolt, the oldest man in Archer County, fell out of the car. Duane, Lester, and Suzie accompany the ambulance driver to the accident scene, but the old man is uninjured. Duane telephones Lavelle to call off their tryst that night, then drives to the lake to sleep in privacy on his boat.In the morning, Jacy Farrow swims across the lake and stops at the boat, but does not recognize Duane until he identifies himself. They discuss old times, and when Duane mentions that he often drives past her house, Jacy tells him to ring her doorbell next time, then swims away. Duane goes home to find that his young twins, Jack and Julie, have been kicked out of Holy Days Church Camp and he must get them.At the Dairy Queen, Lester's wife, Marylou Marlow, asks Duane if she can drive to the church camp with him. On the way, she confesses that his son, Dickie, has impregnated her.At the camp, the twins, Jack and Julie, proclaim their innocence. Later, Duane drives to Suzie Nolan's for sex.At the Dairy Queen, he sees that Jacy has joined Karla, Dickie, Billie Anne, Minerva, and the kids. When Karla tells him she bought Dickie and Billie Anne a house, Duane reminds her that he is $12 million in debt. The kids are curious about Jacy's career as a movie actress in Italy. As Jacy leaves, Duane watches her, and Karla watches him.Later, Marylou Marlow asks Duane to play Adam in her upcoming pageant, and wonders if Jacy would play Eve. Duane looks at photographs of himself and Jacy in the 1952 high school yearbook. Karla hears that he is having an affair with Suzie, but Duane denies it. Hearing that Sonny Crawford is missing, Duane goes to the Kwik Sack and finds the sheriff putting together a search party.Duane and Karla go to Sonny's room at the hotel and find it empty, but from the window they see him sitting on the roof of the old movie theater. Sonny tells them he was watching a movie in his brain. They drive him to a neurological center for tests. Lavelle tearfully telephones Duane at the office to tell him she is pregnant by Lester, but Marylou refuses to divorce him because she is also pregnant.On his way out of town on a trip to Odessa, Texas, Duane sees Jacy's car at the Dairy Queen and stops. Jacy agrees to drive him and Shorty in her Mercedes because she has never been to Odessa. He admits that he has to see a banker, because he is $12 million in debt. Duane drops Jacy and Shorty at a motel, while he conducts business. The deal is inconclusive, and they return to Archer County. When they part company at the Dairy Queen, Jacy asks Duane to let her have Shorty the dog, and he agrees. She tells him to tell Suzie that she will play Eve in the pageant.When Duane gets home, Billie Anne is crying because Dickie smashed up their furniture. Karla informs Duane the bank "called Junior's notes," which means it could also call Duane's at any time. Ruth Popper tells Duane that Sonny avoids him because Sonny never achieved the success that Duane did during the oil boom, but Duane reminds her that Sonny Crawford is the mayor and owns the hotel and the Kwik Sack, whereas Duane is $12 million in debt. He is the one who should be sad.Duane drives past Jacy's house and sees Dickie's truck parked outside. Shorty chases after him, and Duane lets the dog in the truck. He drives to his oil rig and finds his workers target-practicing. He drives past Jacy's again, and lets Shorty out of the truck. Finding Dickie at home reading a book about Italy, Duane hits him. They briefly struggle, then Duane, out of breath, apologizes. Dickie explains that Billie Anne lied about him trashing the furniture, and that Jacy suggested he should leave her and stay at Jacy's house in Italy.Duane stops at the Kwik Sack to see Sonny. Doctors gave him some pills, and he has not lost his car lately, but he would rather watch movies in the sky.When Duane goes home, Minerva informs him that everyone is at Jacy's. The Jackson family arrives at the opening of the centennial celebration. Duane and Jacy practice their Adam and Eve skit, which brings back memories of her being the homecoming queen and him the football hero. Lee Roy tells Duane the oil well has hit something. When he goes home, Karla tells him that Junior Nolan and Billie Anne ran off together, and Dickie has filed for divorce. Jacy has offered to take Karla and the twins to Europe, and has explained all of Duane's problems to her. Duane knows nothing about women. Karla could be having some once-in-a-lifetime feeling while sitting next to him, and he would never notice. The newspaper reports that Saudi Arabia is going to reduce the price of oil to $5 a barrel.At the centennial parade, Lester Marlow sits on a float pointing a gun at his head and clicking the trigger. Jacy is the queen and invites Duane to join her as the king. "Old Man" Bolt is wired to a horse for a ride around the rodeo rink, but he starts to tilt. Both Duane and Dickie run to save him, but Duane falls and breaks several ribs. In the Adam and Eve skit, Jacy grabs Duane and kisses him, to Sonny's dismay. She takes Duane to the hospital to get his ribs bandaged. Meanwhile, Sonny hears an old voice from Ruth Popper, who tells him to pull into her garage. He crashes into a house located where the garage once stood.When Duane and Karla take Sonny to the Dairy Queen, he claims he did not see the house there. It used to be a garage where he and Ruth parked. They invite him to stay at their house, but Sonny prefers jail.The next day, Jacy, Karla, and Duane go to the Kwik Sack to cheer him up, but Sonny claims that he is the town failure and Duane is the town success, so how could they ever be best friends? Karla wonders if she is a loser, too. Otherwise, why would Duane sleep with all his tacky girl friends?Returning to the office, Duane finds Ruth packing. She informs him he is broke. When he asks why Sonny is living in her trailer, Ruth explains that he once saved her. Duane goes home and finds his family at the dinner table. Jacy is drunk and depressed about her son who was killed in an accident in Italy.That final night at the centennial, Duane gets drunk and watches Jacy dance with Dickie. The twins sneak into the back of a truck and steal dozens of boxes of eggs. Reverend Rawley arrives with a sledgehammer to knock down the Texasville facade, but kids run upstairs in the courthouse and bombard him with eggs. An egg fight spreads through the festivities. Duane walks to the lake, and does not return home until morning. Karla invites him into the bedroom, where they make love.Afterward, the family goes to the Dairy Queen, but Ruth arrives to announce that Sonny is missing. They find him sitting at the top of the bleachers of the rodeo rink. Duane and Ruth stop him from falling, and they all go to the Dairy Queen for breakfast. Watching the twins on bikes, Jacy grabs Duane and cries on his shoulder. Julie Jackson runs to hug Sonny, and Ruth and Genevieve Morgan, the Kwik Sack clerk, put him in the car.