The film begins with two young people who have enjoyed a summer romance, saying goodbye. The summer is over and Sandy will be returning to Australia, and Danny back for his last year at High School.
On the first day of that last year we discover that Danny is the co-leader of the T-Birds, and he greets his friends: Kenickie, Doody, Sonny La Tieri and Putzie. We are also introduced to the Pink Ladies: Rizzo, Frenchy, Marty and Jan.
The Biology Lab:
Mike is seated on the front bench wearing a orange polo-shirt and a Rydell letterman sweater. Patti Simcox, a girl who considers herself to be the most important person student in school, decides to sit next to him, forcing him to shuffle along the bench. While Patti's attention is engaged elsewhere, Kenickie, who is sitting in the row behind, drops a dead frog into her open bag. When she finds the frog she screams. Mike and the girl on the other side stand up too and everyone laughs as Patti runs from the classroom.
Frenchy introduces Sandy to the Pink Ladies and Sandy tells them all about her summer romance. When Rizzo discovers her Danny is Danny Zuko, she arranges a meeting. Sandy and Danny are surprised to see each other, and Danny pretends that she did not mean that much to him as he is concerned about his reputation within the T-Birds. Sandy runs off.
We learn that Kenickie and Rizzo are an item.
Sandy becomes a cheerleader and goes on a date with Tom, the star quarterback of the Rydell Rangers. However, she is not over Danny. When Danny shows his jealousy by trying to belittle the Jocks, Sandy dares him to do better. Danny decides to try out for various sporting activities and ends up on...
The Basketball Court:
Mike is one of the basketball players. Coach Calhoun gives the ball to Zuko, who starts bouncing it, trying to be clever. Another player, Arnold takes the ball from Zuko. The ball is passed from player to player with Zuko unable to get it back. The ball ends up with Mike. Zuko is blocking him - and there is a call of Mike in the background as another player asks for the ball which implies that, as he was uncredited, they just referred to Michael Biehn's character by his real first name during the scene. However, Zuko, angry that he cannot get the ball by fair means, punches Mike in the stomach and takes the ball. Coach Calhoun leads Zuko away while the others deal with their winded teammate.
Calhoun finds a solo sport for Zuko - running. You see Mike and the other members of the basketball team at the centre of the track doing warm-ups when Zuko goes running past.
Note: This is the last noticeable appearance of Mike.
Rest of Grease:
Kenickie and Rizzo have unprotected sex - later they argue. Rizzo tries to get back at Kenickie by flirting with the leader of the Scorpions.
Danny takes Sandy to the National Bandstand Television Show covered by KZAZ TV. Kenickie takes Cha Cha and Rizzo goes with the leader of the Scorpions but Sandy is dragged away by other members of the T-Birds so Danny can be partnered by the more talented Cha Cha. Danny and Cha Cha win the dance trophy.
Cha Cha's ex-bofriend, leader of the Scorpions, is jealous and challenges Kenickie to a race. When Kenickie is injured, Zuko takes the wheel and wins the race.
Sometime later we learn that Rizzo may be pregnant. News spreads fast and, eventually, it reaches Kenickie. When he confronts her she shrugs him off. The following day, Rizzo is made an outcast by Patti Simcox.
Last day at High School: the Rydell Graduation Carnival.
Rizzo discovers that she is not pregnant after all. Kenickie and Rizzo make up. Zuko decides that he wants Sandy, and if that means becoming a dork then so be it. Meantime, Sandy ahs decided that she wants Danny, and if that means throwing off her good-girl image - then so be it.
Sandy appears at carnival with permed hair and skin-tight satin pants and top. She and Danny go off together.