Season 2

Tim has a new reader, Randall. Penny returns to New York after a harness malfunction during a performance of Mean Girls caused her to sprain her hip, forcing her to leave the tour, and she finds that the news of her injury has turned into a Broadway-wide rumor that she "broke her vagina". Linda tells Penny that Iron Dog was moved from Boston to New York, and that everyone in the cast and crew was replaced except Aaron.

Tim goes to the Berkshires to see a play he cast; he drives Penny there as well, so she can stay at Steven and Cameron's summer house. A leaky roof where Tim was staying forces him to also stay with Steven and Cameron.

Tim finds out about an opportunity to work with director Nolan Grigsby. Aaron gets signed with Steven's casting agency. Penny's mother and stepfather come to visit her. Penny's stepfather accompanies Penny to an audition for a musical, and ends up getting called to audition, then gets a callback, while Penny doesn't.

Penny decides that she will no longer date actors. Tim asks Penny to be his reader for a Civil War play because Randall is away on a tour. Nolan comes to New York, meets Tim, and sits in on the auditions. Penny, sexually frustrated, breaks her own rule by dating three actors. Nolan asks Tim to cast his new play. Penny auditions for a new musical, Piñata Party, where she runs into Aaron and finds out that he's now dating a Broadway star, Serena Maxwell.

Penny and Aaron end up at Steven's office at the same time, and Penny, in an effort to avoid Aaron, hides under the table. Penny and Randall meet Serena, who tells them she'll be starring in a new musical, Jeremy's Fort. Steven and Cameron attend the Iron Dog opening night in New York, which turns out to be a disaster due to the new director.

Iron Dog's New York opening night has received terrible reviews. Tim, Randall and Gail assist Nolan in auditions for his play, based on Nolan's "Compass-ition" theories. Penny and Raina go to an acting class where Serena is also present, and Serena is bereft due to the bad reviews. Penny and Tim attend an office promotion party for Steven, which Aaron also attends. Penny and Aaron, who realize neither one has seen the reviews yet, leave the party so they can finally read them.

Nolan continues with his unorthodox audition process. Tim, inspired by Nolan's physical prowess, invites Penny and Raina to a fitness class. Penny auditions to play Serena's crippled sister for Jeremy's Fort, and Penny's stiffness from the exercise helps her nail the part. Aaron tells Penny that Iron Dog is closing, and that he's still attracted to her. Nolan massages Tim due to Tim's own stiffness, and Tim discovers that there is romantic chemistry between the two.

Penny gets a callback for Jeremy's Fort, but is unsure whether to go or not, due to the love triangle that now exists between her, Aaron and Serena. Tim realizes that he is attracted to Nolan, but doesn't know whether to make his feelings known. Penny is convinced by her friends and family to attend the callbacks. Gail, aware of Tim's feelings, makes up a reason for Nolan to see Tim again before he is set to leave New York; Tim confesses his feelings, and Nolan reciprocates, although Nolan then has to leave. Penny gets cast in Jeremy's Fort. Penny goes to see Iron Dog on one of its last nights, and tells Aaron afterward that she is still attracted to him as well; the two kiss, but decide to keep any relationship on hold until the end of the run for Jeremy's Fort.