After going back-to-school shopping, Homer learns from Apu that he can sell grease to make a profit. At breakfast, Homer begins frying up various amounts of bacon to use the grease to make money, then decides to hire Bart for his "grease business" (ultimately forcing Bart to quit school). Meanwhile, on the first day back at school, Lisa volunteers to help Alex Whitney, a fashion conscious new student, by showing her around the school. To help her make new friends, Lisa takes Alex to meet Sherri, Terri, Allison Taylor and Janey for lunch in the cafeteria, but then the girls quickly abandon Lisa after rapidly becoming best friends with the newcomer.
Homer and Bart begin their grease business and make 63 cents worth of grease from $27 worth of bacon, much to their disappointment. The two continue their grease business, resuming to drive past Springfield Elementary School where Bart gazes at his former schoolmates playing. The pair then drive to Krusty Burger, where they steal grease from the fryers (and consider taking some from the face of the Squeaky-Voiced Teen working there), but the grease Homer and Bart stole (and quite literally placed in the back of the car, causing Bart to tell Homer that Marge will most likely kill him if she ever found out that he not only stole grease, but was also dumping it in the back of the truck) is later taken by The Springfield Grease and Shovel Company, who attempt to warn them off.
Alex convinces Principal Skinner to put on a school dance rather than another event he had organized. Skinner agrees, so Alex and Lisa, accompanied by Sherri, Terri, Janey and Allison visit the mall to purchase party supplies. The girls soon take a detour and begin trying on outfits for the dance, despite Lisa's protests and Alex attempting to convince her it will help her get a date for the dance. The group leave the mall, none speaking to each other. Lisa wears the gothic outfit she bought at the mall, but the boys and not impressed and she finds it uncomfortable.
Initially, Lisa doesn't want to go to the dance, but after some persuasion from Marge, Lisa decides to go to the dance to take tickets at the door. When Principal Skinner has to leave for a brief and asks Lisa to supervise the dance while he's gone, Lisa's somewhat surprised to see that the boys and girls have separated and are standing on opposite sides of the gym, afraid to approach each other. Alex doesn't understand why this is happening and complains to Lisa that they're acting like kids---Lisa points out that it's because they are kids, and not adults or even teenagers, so they simply aren't ready for things like school dances and dating. Lisa also adds that she, Alex and the rest of the students shouldn't be in a such a rush grow up and that they should their childhood while they still can.
Bart reveals to Homer that the school kitchen will have an enormous amount of grease. They arrive at the school during the dance to steal it. Homer sneaks into the kitchen and plants a hose in the fryer, sucking the grease into the car, but Groundskeeper Willie spots them and attempts to stop them, claiming that the grease is for his retirement. A fight ensues between the two of them after a brief argument regarding Willie's nationality. Homer tries to escape, but Willie grabs his legs and strangles him with the hose sucking the grease. Due to increased pressure the hose explodes, causing grease to fall out of the ventilation shaft into the hall where the dance is being held. A faux-snowball fight using the grease breaks out among the students, and Alex eventually joins in after being told by Lisa to act her own age, saying, "You are so dead." The episode ends with Lisa throwing a second at Alex and she says, "Ow, there was bacon in that."