After another three-week vacation, the group is still looking for a way to fight X.A.N.A.. X.A.N.A., meanwhile, is trying to destroy Lyoko, preventing them from doing just that. He does so by targeting the core, which contains the code that maintains the virtual world. In a side story, Odd blackmails Jim into asking Principal Delmas to make Odd have the same classes as his friends. Additionally, Yumi decides against having a relationship with Ulrich and decides it would be better if they were just friends. While defending the core, Aelita is suddenly devirtualized by the enemy. However, she still ends up back in the scanners and Jeremy realizes that this is because Aelita is fully human, just like the rest of the group, so she does not need Code: Earth anymore to be materialized on Earth.

During a field trip with the rest of her 10th grade class, Yumi finds herself facing off against the students, teachers, and bus driver, all of whom Xana has possessed. At the same time, Xana plans to get rid of Lyoko through an alternate means: destroying each sector one at a time. To this end, he uses the Scyphozoa to possess Aelita and enter Code:XANA into the way tower, wiping out The Forest Sector, realized by Jeremie.

Xana attacks the Lyoko warriors by possessing a large amount of food. At the same time, he bugs up The Mountain Sector by rising the digital sea, but Odd and Aelita go to Sector 5 to stop him. Xana also mounts an attack on Lyoko's core at the same time.

When Xana hacks into a weapon's manufacturing computer network and leaves a paper trail pointing to Jeremie, government agents arrive at the school looking for him. Then, the whole gang arrive at the factory. When they end up tracking Jeremie to the factory, Xana possesses them for an attack on the supercomputer itself in The Ice Sector, and in The Mountain Sector.

Aelita gets mad at Jeremie and she and Odd go into Lyoko without telling anybody, which causes problems. On lyoko, Xana creates a diversion to get everybody to deactivate the tower in The Mountain Sector while the monsters (mostly Mantas and Creepers) worked on destroying the core of Lyoko. Jeremie and Aelita find a strand of DNA that belongs to Franz Hopper, indicating he may be still alive.

Odd and Ulrich are talking in the shower room when a young boy, Johnny, asks to talk to Ulrich. It turns out that Johnny likes Yumi, and being jealous of that, Ulrich tells him to follow her around to get her attention, which Yumi hates. After following her all day and ending up in the gym, a flock of crows possessed by Xana attacks Yumi. She is beaten unconscious by their electrified beaks and sent to the hospital. Meanwhile, as Jeremie and the others are fighting monsters to deactivate the tower, the Scyphozoa possesses Aelita and has her enter Code:XANA into the way tower, wiping out The Desert Sector for good and leaving Lyoko with two main Sectors - The Mountain Sector and The Ice Sector. Once Jeremie finds out, he activates a return to the past with strong hope for Yumi's life. This episode proves that Ulrich is not as comfortable as being just friends with Yumi as he says he is.

After being rejected by Yumi, William makes it his mission to find out the secret she's hiding. Soon enough, he manages to follow Ulrich and Odd to the factory and learns about Lyoko and Xana. Meanwhile in The Ice Sector, the Scyphozoa possesses Aelita to enter Code:Xana in the way tower, but is devirtualized just in time. The group thinks William's help is going to be quite useful, when a possessed demolition worker sets several bombs in the factory. They take a vote as to whether or not to include William as part of their group, but Yumi votes no and Jeremie initiates a return to the past.

Before leaving Sector 5, Odd and Ulrich are hit by a weird red beam from a pair of Mantas. They both eventually begin to act strange in the real world during a school play. They start seeing their environment, people as enemies, and fight as if they were still on Lyoko. They are branded as insane and hospitalized while Jeremie tries to figure out what happened. After finding the cause and devising a cure, Jeremie has Yumi and Aelita break them out of the hospital. Meanwhile, Xana uses their handicap to mount an attack on Lyoko's core. Yumi heads to protect the core, as Aelita tries to help the boys who instead now see the real world while on Lyoko.

During a test to materialize Ulrich directly into Sector 5, his mind and body become separated, leaving Ulrich's body trapped on Lyoko and his spirit stuck on Earth. What's worse, Xana possesses Ulrich's body and uses it to attack the core. Meanwhile, Susan, disappointed with Ulrich's bad grades, tries to place him in remedial classes.

When Odd complains that he doesn't have any cool powers on Lyoko like his friends, Jeremie designs him a teleportation power. It works, but ends up leaving duplicates of himself in the location he teleported from in The Mountain Sector. After trying it twice, Jeremie devirtualizes Odd to find out what went wrong, accidentally creating three clones. Meanwhile, in the real world, Xana attacks using a mysterious smoke that turns anyone it hits to stone. One of Odd's copies gets turned to stone, so the other two Odds must retrieve him before they become unstable and disappear.

With Xana's attacks becoming more and more difficult to handle, the group contemplates adding another member to the team to make things easier. William is still the prime candidate, but Yumi still doesn't trust him. While Jeremie works on a way to get to Sector 5 directly, Xana makes a clone of him and has it take Jeremie's place. Meanwhile, Yumi has missed one too many classes, and will be expelled if she misses another. Odd and Yumi end up bugged by Jeremie's clone, preventing them from rescuing Aelita from the Scyphozoa. The Scyphozoa possesses Aelita, having her enter Code:Xana into the way tower, wiping out The Mountain Sector, cutting off access to Sector 5. However, Jeremie completes his program to send the group to Sector 5 directly.

After William is initiated into the group, a series of events leaves only him and Aelita to defend Lyoko's core. During William's first mission to Lyoko, Xana uses the Scyphozoa to possess him, making him the general of a massive army focused on Lyoko's core. Despite their best efforts, the group can't stop the possessed William from destroying the core, which both renders the supercomputer useless and transforms William into a darker, Xana-themed version of himself. Later, in the Hermitage, while the group broods over their predicament, Jeremie receives a coded message directly from the internet, sent by none other than Franz Hopper who somehow survived the destruction of Lyoko.