Rorschach returns from the dead after obtaining powers similar to Doctor Manhattan. Rorschach visits Manhattan on his new planet of Xexius, where Manhattan has just finished creating a new breed of creature inspired by Veidt's squid alien in order to enact a genuine invasion of earth. Rorschach confronts Manhattan on the newly created planet, and the two titans engage in an epic battle that splinters the planet into two halves and seemingly kills Manhattan. The two planetary halves split apart, one flying straight into a nearby star. It is not revealed whether the remaining half contains any squid alien life.
The government starts funding Watchmech production.
Adrian Veidt is elected president of the United States, and Bubastis first appears in her new form as his Vice President. These issues present a powerful social message as many people protest her position on the grounds that she is not technically human.
Daniel (Nite Owl II) travels to the east where he finds a monolith to the ancient Night Owl clan. He goes there to inform them that his mentor Hollis Mason (Nite Owl I) has died, but he discovers that the Night Owl clan has been wiped out by the crime syndicate that controlled the Knot Tops.
Rorschach goes after former-President Nixon who has become a super villain known as The Pink Man and unleashed a crime wave throughout central New Jersey. Rorschach uncovers Nixon's secret love affair with supermodel Danielle Baxter, which leads to the famous first cover.
The Comedian returns from the grave thanks to Rorschach's new found powers and his desire to stop Adrian. However things go to hell as The Comedian plans to go back and rape Laurie (Silk Spectre II) as Veidt uses a memory-wipe ray on him to make him forget she was his own daughter.
Bubastis is diagnosed with cancer.
Daniel returns to New York. Here he meets Bubastis and tells her about the crime syndicate in hopes to meet with Veidt. Bubastis tells him Veidt would never help him, however upon hearing of the syndicate's connection to a possible cure for cancer she decides to go with Daniel to assist him in the destruction of the syndicate.
Some time after the events of Clone Saga but before Volume 3. Red Star over New York takes place.
Volume 3[]
Dr. Manhattan resurfaces in the slums of New York as a heroin junkie. These issues are notorious for not being approved of by the Comics Code Authority as the writing team wanted to portray a strong social message against drugs. The scene where Manhattan discovers he has gotten AIDS from sharing needles and he begins to cry for the first time in ages is still one of the most famous scenes from the series.
Adrian Veidt is seemingly killed by an assassin who turns out to be Blight-Owl, a rogue incarnation of Nite Owl from an alternate future. It turns out Veidt had been taken prisoner by the Pink Man and had been replaced with a robot that would serve as a puppet for Nixon's new attempt at a new Presidency. The Pink Man and Blight-Owl have a final duel with katanas as Veidt escapes and sets off an explosion that seems to kill both of them.
Daniel Dreiberg briefly takes up the mantle of Eclipse Owl and trains a sidekick, Twilight Wing. There has been a lot of controversy over the scene where the two of them take a shower together and the many times Dan gives the boy a pat on the butt. There are many rumors that the two of them might have been closet homosexuals.
Laurie's first pregnancy arc occurs. The father is later revealed to be the Queen Squid. Rorschach attempts to kill the baby after finding out that it isn't human, but ultimately Laurie is forced to sacrifice herself to prevent the Squid's spawn from destroying the world. This leads to the Queen Squid's death.
Bubastis falls into a coma after a drunk driver runs her over with his car. She later awakens and demands that she be moved to Egypt so she could see her sister before she dies. Her sister turns out to be the evil sorceress Sitsabub who destroys the convoy carrying Bubastis, killing everyone inside.
In a desperate attempt to gain money to help support his heroin habit, Dr. Manhattan replicates himself several times and organizes a daring afternoon jewel store robbery. All goes according to plan until the cops unexpectedly arrive on the scene, killing two of the Manhattan replicants. Once back to his secret hideout, they find out that there is a rat in their midst. A few flashbacks and a torture scene later, we find out that Manhattan number 4 is the rat. Manhattan kills the replicant, but before he can take the jewels, he enters a Mexican stand-off with the surviving clones. The issue ends with a black page with sound effects of guns firing. However, in an interesting plot twist, the incident is never acknowledged, as the next issue features Manhattan still on the street looking for smack.