In the continuation of The Last Picture Show, the story unfolds in the small town of Anarene, Texas, during the summer of 1984. Here, we find Duane Jackson lounging in a hot tub, trying to amuse himself by shooting at his dog Shorty's doghouse. Accompanied by Shorty, he drives his pickup to the oil company's headquarters where he receives updates from Ruth Popper, the office manager, regarding the latest bills and payments. A phone call from a distressed banker, Lester Marlow (played by Randy Quaid), reveals that his wife Marylou has left him, and he seeks Duane's assistance in reaching out to her. Ruth notes that Marylou's departure has added yet another "footloose" woman to their town, which already includes Suzie Nolan, wife of Junior Nolan.
As Ruth hands Duane a bank check for Lester, she encourages him to visit Jacy Farrow, his high school sweetheart, who has returned home after many years, grappling with the loss of her child. Driving by Anarene's dilapidated movie theater, Duane reflects on its neglect over the years. Upon arriving at the Dairy Queen, he meets up with Lavelle Bates and Charlene Duggs. They notice his weight gain but still find him appealing. The conversation shifts to the town's declining fortunes, particularly the oil industry's downturn.
Mayor Sonny Crawford mentions that Jacy recently visited his store, noting that she still looks fantastic. A telephone call from the sheriff brings troubling news – Duane's son, Dickie (portrayed by William McNamara), has been arrested yet again for speeding. Deliberately avoiding Jacy's house, Duane visits his oil rig, trying to get his crew back on track, before heading to the jail to bail out Dickie.
Once at home, Dickie spots his fiancée Billie Anne's truck and hesitates to go inside, revealing his infidelity with both Suzie and Marylou. When he takes the wheel of Duane's truck, chaos ensues as Duane discovers Karla (played by Annie Potts), Billie Anne, and the family's housekeeper Minerva blasting balloons in the backyard. Amidst the tension, Karla informs Duane that Lester has attempted suicide and that Junior is on edge, apparently looking for Dickie.
As the local centennial celebration approaches, conflicts arise over whether to build a replica of the notorious Texasville, known for its saloons and brothels. Despite opposition from Reverend G. G. Rawley, a majority vote proceeds with constructing a small facade on the courthouse square. Duane later visits Lester in the hospital, where the latter expresses anxiety about his future and echoes concerns about Marylou's nighttime activities.
The unfolding drama intensifies when Duane finds himself entangled with Suzie, who is high on cocaine, yearning for his affection but interrupted by distressing news regarding an elderly man. Later, an unexpected swimming encounter with Jacy brings back memories as they reminisce about the past, leading to her invitation to stay connected. Meanwhile, tensions rise as Duane discovers more about his family's secrets, including revelations about his children's behavior and an affair brewing between Junior and Billie Anne.
In a series of quirky and dramatic events, the town celebrates its centennial, where mishaps occur involving Lester and others. Amidst the festivities, Duane reflects on his relationships, financial struggles, and the challenges of family life. As the narrative culminates in a chaotic egg fight and heartfelt moments of connection, Duane’s life continues to intertwine with the complexities of love, loyalty, and the passage of time in Anarene. The emotional roller coaster reaches its peak as Duane navigates the complexities of adult relationships, leading to an unexpected night of romance with Karla under the stars, concluding with the bittersweet reminder of the central characters' intertwined lives in a town marked by nostalgia and change.
