Grace and Leo plan on spending Christmas Eve at the Nutcracker, while Will accepts an offer to spend Christmas Eve lounging in a bathrobe with Jack and Karen at the Palace Hotel. At the last minute, Leo gets beeped and has to go in to the hospital, so Grace invites Will to join her. Will, who has always loved the Nutcracker, can't say no, but when Leo shows up at the last minute he gracefully bows out so that Grace can spend Christmas Eve with her husband. Will joins Karen and Jack back at the hotel caroling the service people at the hotel, and Grace and Leo try to enjoy hot buttered rum before the show starts, but Leo gets beeped again. Grace drags Will back to the theater, but Leo shows up again just before they go inside. Grace makes the difficult decision of taking Will with her to the show, but it turns out that neither Will nor Leo really want to watch dancing toys, so they both end up ditching her.

Karen goes on a date with a charming and handsome restaurant owner, Milo, but starts to get a little uneasy when he says he's going to call her and then doesn't for three days. Grace goes to give Milo a piece of her mind, and is shocked when he admits to being a playboy and says that he lied to Karen to make her feel better, but she's too old for him. Grace tries to give Karen the news gently. Jack talks Will into joining a gay soccer team, under the assumption that it will be like a "gay bar on astroturf," but when the team turns out to be serious about the game, Will decides to quit because he's terrible at soccer. Jack is upset when Elliot decides to quit his own soccer team because he's so bad at the game, so Will decides to stick with it to be a role model for Elliot. Elliot quits his team anyway, and Will actually has to get off the bench and play when one of his teammates is injured during a game. In a total fluke, while trying to run away from the ball, Will slips and, while falling, kicks the ball backwards into the goal, scoring the winning point for his team.

Grace moves into Leo's apartment in Brooklyn and meets a friendly neighbor, Julie. Julie is a massage therapist, and when she gives Grace a free massage, Grace is concerned when she massages a little further south than usual. Grace gets Karen to hire Julie to see if that's a normal part of Julie's massage, and when she finds out that it isn't, she asks Julie about it. Julie assures Grace that it's perfectly normal for girlfriends to be physically friendly with each other, and that's all it was, friendly. Grace is reassured, but thrown off-guard when Julie surprises her again during a hug. Karen sets up Will with her newly out-of-the-closet cousin Barry. Jack tries to fight Will for the opportunity to date Barry, until he sees the man. While Karen encourages the relationship, Will tries to let Barry down easily. Jack tells Will that he should mentor Barry, and teach him how to be a proper gay man.

Will and Grace worry that they've lost their mojo (or in their case, their homojo) when they don't seem to have the connection that they used to. Their situation becomes critical when it looks like they might lose at game night with their friends. They have a serious talk and vow to work harder at communicating about the little, trivial things that are so important in their lives, and they get it together just in time to pull a win. Karen has to fight for her queer when Jack becomes entranced by the new woman in Stan's life, a British ex-stripper named Lorraine.

Will and Jack's transformation of Karen's schlubby cousin Barry is complete, and the whole gang gussies up to attend the gay gala of the year. Will suddenly realizes that he's attracted to Barry, but just before he gets up the nerve to ask him out, clueless Jack beats him to the punch. Karen spars with her old "friend," Beverly Leslie, who is out for blood now that Karen has been dumped by Stan.

Will and Jack, now both infatuated with Barry, make Barry choose between them, and Barry chooses Will. Will has a week of great dates with Barry, and finally gets Jack to forgive him by telling Jack that he looks older when he's angry. Will asks Barry to be exclusive, but Barry says he wants to play the field for awhile since he just came out. Karen impersonates a maid when a hot maintenance man at her hotel mistakes her for one. They start a passionate love affair, and Karen finally admits that she's not really a maid, she's actually rich. Karen is excited when her poor maintenance man says he can still love her even though she's not poor like him, but when she finds out that he doesn't drink she calls the whole thing off.

A lovesick Will mourns the loss of Barry and forms a lonely hearts club with Karen and his crazy boss, Mr. Stein. Unfortunately, the club comes to a screeching halt when Karen and Mr. Stein hook up. Grace tries to make a sexy videotape for Leo, but turns to Jack for acting help when she realizes that she's more silly than sexy. Jack finds that the best solution is to tape Grace in the shower when she doesn't know about it so she acts natural.

For Grace's birthday, Will flies in Leo as a surprise, but when Leo arrives a day early Will tries to hide him away to preserve the surprise for the day of Grace's actual birthday. Leo gets fed up and goes back to his apartment to freshen up, but he runs into Grace there and they have a happy reunion. When Grace finds out what Will went through to surprise her, she tells Leo that they have to pretend they didn't see each other, but when Leo sees Will, he can't keep his mouth shut. Will decides that he and Leo shouldn't tell Grace that Will knows that she's not going to be surprised, but when Karen and Jack get wind of what's going on, they decide to surprise both Will and Grace by kidnapping Leo and dumping him by the side out of the road outside the city.

Karen decides to get a taste of "real life" and moves in with a woman named Liz. She and Liz get along fabulously until they go out clubbing and set their sights on the same guy. Liz tries to kick Karen out of the apartment, but Karen realizes that she actually owns the whole building, so she kicks Liz out instead. Will falls off his clogs and sprains his ankles. When Will starts enjoying his pain killers a little too much, Grace and Jack stage an intervention.

NBC remembers some of the past guest stars and their quirky bloopers from its Emmy Award winning comedy "Will & Grace." Hosted by series star Eric McCormack, the special includes such past guest stars as Sandra Bernhard, Beau Bridges, Lesley Ann Warrne, Joan Collins, Elton John, Matt Damon, Glenn Close, Michael Douglas, Cher, Kevin Bacon, Demi Moore and Madonna. Written by Laura Kightlinger.

When Karen finds out that Will is representing Stan in the divorce, she hires her own hotshot attorney, Jason Towne. Will worries about Karen's judgment when Jason turns out to be a young snot-nosed kid that doesn't know pro-bono from a fidelity clause. Will tries to help Jason, and then advises Karen to get a new lawyer, but when Karen confronts Jason it turns out that he's not as bumbling as he seemed, that it was all an act to make Will slip up. Jack brings in a new client for Grace, his latest boyfriend, Cam. Not only is Cam rich, but Grace loves his taste in home decor, and when Cam dumps Jack the next day, Grace is loathe to give into Jack's demands and drop Cam as a client. Grace goes to tell Cam she can't work for him anymore, but Cam talks her into remodeling his enormous country house instead. Jack busts them and Grace finally quits entirely, valuing her friendship with Jack too much to betray him. Then, of course, Jack gets back together with Cam.

As the divorce proceedings continue, Karen suddenly finds out that Stan has died. Karen and all her friends attend the funeral, as does Stan's mistress Lorraine, who was under him at the time of his death and was trapped under his body for two days. A number of people speak fondly of Stan at his funeral, but everyone is really just waiting for the reading of the will. Rosario finds out that she gets $10 million if she works for Karen for another 20 years. Grace gets a painting of Karen. Apparently, Stan thought Will and Jack were a couple, and leaves them $20,000 to get married. Finally, Karen finds out that she gets the bulk of Stan's estate, and Lorraine is left with nothing. Leo gets invited to Guatemala to help set up a new Doctors Without Borders clinic, and asks Grace to come with him. Grace happily accepts his offer, even though she really doesn't know where Guatemala is.

Grace gets more and more depressed about going to Guatemala with Leo, especially when Will and Jack plan to accompany Karen on her yacht to the Caribbean to scatter Stan's ashes. Leo tells Grace she can go on the yacht instead of to a third-world country with him, and she celebrates until she sees the hot blonde doctor that will be going with Leo. On the yacht after Leo's departure, Grace convinces herself that he would never cheat on her, but becomes more concerned when she discovers a letter from hot doctor Danielle to her husband saying that she wants him. Grace orders the yacht to Guatemala. Karen, while scattering Stan's ashes, discovers that his mistress Lorraine has stowed away on the boat. The two women actually start to get along, until Lorraine asks Karen for some of Stan's money. In the fight that ensues, Lorraine pushes Karen overboard and Rosario jumps in after her to save her. Karen and Rosario end up being rescued by a Russian barge that is delivering thousands of cases of Stolichnaya vodka. Will and Jack thoroughly enjoy their tropical vacation, and also enjoy a few too many tropical drinks. They are both horrified when they wake up in the same bed.