In season two, Michael Bluth, once again determined to be free of his dysfunctional family, packs up the car and his son George-Michael and heads for Arizona. But he's soon pulled over by the police who tell him that his father, George Sr., has broken out of prison. Due to the company's shady business deal with Iraq, Michael could face prison time, so he returns home to clear his name even as George Sr. secretly flees to Mexico, Tobias decides to be an understudy for the Blue Man Group, and Lucille begins a torrid affair with her husband's twin brother, Oscar.
Michael and George Michael leave for Phoenix but go back to ensure the family misses them. Lindsay wants to have an open marriage, which causes Tobias to try to join the Blue Man Group under the impression that they are a support group for depressed men. Lucille signs Buster up for the army after being goaded by a Michael Moore lookalike. Gob becomes president of the Bluth Company.
Michael is driven crazy by Gob when he impresses the board as the new company figurehead due to Michael's legal troubles. Meanwhile, George Sr. is arrested in Mexico for a crime Oscar committed, and Buster witnesses something that utterly shocks him.
Michael is increasingly frustrated over being abandoned by the family, and when the staircar is found in Mexico, Michael vows to find his father and give him a piece of his mind. Also, Buster spends time with Lupe's family and thinks he's in Mexico.
Lucille hires a bounty hunter, Ice, to find George Sr., who may be closer than everyone thinks. Gob tries to pull off an elaborate illusion, Maeby tries to set Lindsay up with Ice, and Michael tries to mend George Michael's broken relationship.
George Sr. fears he's losing Lucille to Oscar. Gob motivates Buster for the Army while Lindsay spends more time with Maeby to get closer to Steve Holt and Tobias starts working out.
Gob stages mass firings after being inadvertently roasted at the Bluth Company Christmas party. Michael is forced to rebuild the Banana Stand, and Buster plays hooky from the Army at an arcade game.
The Bluths rival development company hires Gob, who finds the company president a father figure, in preparation for the Bluth-Sitwell softball game; Lindsay hallucinates from taking anti-depressants.
Michael sells a portion of his stock in the Bluth company to buy a car, and Lucille 2 returns, only to discover that Buster is dating the company secretary Starla.
Michael reunites with his long, lost love Sally Sitwell, but faces interference from parents. Meanwhile, the two Lucilles need someone to bid on them at the bachelorette auction with Buster already in a relationship.
With the company in dire financial straits and the Bluths no longer the primary shareholders, Michael must turn to old family friend "Uncle" Jack Dorso for financial assistance. Uncle Jack, however, wants something in return.
Just as Michael's relationship with Sally starts to flourish, Maggie Lizer returns nine months pregnant, and Michael immediately assumes he's the father. George Michael attempts to break up with Ann, and Buster learns he's being deployed to Iraq.
Michael tries to find out who's the father of Maggie's baby, or if it's just another of her lies; Gob tries to find out whether he was responsible for Buster's accident.
Lucille abducts George Michael for a mother-son dance, Buster adjusts to having a hook for a hand and Gob reunites with his estranged wife. Also, Tobias stars as George Sr. in a biopic about the Bluth family, which causes Lindsay to become more attracted to him.
George Michael runs for student body president, which Gob manages to ruin. Buster has an affair with Lupe, who is being sought after by Lindsay and Tobias attempts to move out of the model home, then develops a new persona when he regrets his decision.
Gob and Buster team up for some magic tricks with the help of Buster's fake hand, but when Tony Wonder, a rival magician, starts to mentor them, somebody gets the finger. Meanwhile, Michael is forced to delegate some work when he's hospitalized and Lindsay teaches George Michael how to drive using the staircar.
George Sr. tries to find a way to attend an anniversary dinner for Lucille while Michael deliberately offends Ann's devout Christian parents. Tobias goes overboard performing his "Mrs. Featherbottom" persona.
Gob confronts the editor of the videos that showcased his magic mistakes. Michael tricks Lucille in to rehab, and then attempts to get her out after George Sr. is kidnapped.