New cast members for this season include Jaime Murray as Lila, an artist who is a former meth addict and arsonist who becomes Dexter’s sponsor (and later his lover), Keith Carradine as FBI Special Agent Frank Lundy and JoBeth Williams as Rita's mother Gail. The role of Rita's son Cody was re-cast, and in Season 2 was played by child actor Preston Bailey.
Dexter begins the season unable to satisfy his urges for over a month, due to the constant surveillance by Sgt. Doakes. When the opportunity to kill arises, he has problems executing his victims after killing his brother at the end of season 1.
To further complicate matters, treasure hunters discover Dexter's underwater dumping ground for his victims. As the police extract body part after body part from the ocean, the media dubs the killer the "Bay Harbor Butcher", and FBI Special Agent Lundy (played by Keith Carradine) is brought in to catch the "Butcher."
A cult following begins to form behind the "Butcher" when it is discovered that his victims were themselves responsible for deaths. Dexter even finds that a comic-book character, "The Dark Defender", was created in his honor where he comically states as he looks at the poster, "Nah, it's too hot to wear all that leather in Miami".
Rita's relationship with Dexter becomes more tense as she and her children are dealing with the death of her ex-husband Paul, who was killed in a prison fight. Paul's repeated suggestion that Dexter was to blame for his imprisonment eats at Rita's conscience and eventually Rita accuses Dexter of setting up her ex-husband. Dexter admits to setting up Paul, but Rita refuses to believe that Dexter premeditated the crime and assumes that Dexter is a heroin addict. He acquiesces to "having an addiction", though he characteristically allows her misinterpretation to go without clarification; in return, she vows to stay with him while he goes through the Narcotics Anonymous program. In this way, Dexter avoids responsibility for Paul's death (though he set the process in motion) and consequently maintains the rationalization that he only (directly) kills people who are murderers. Doakes continues to pursue Dexter until he encounters Dexter leaving a NA meeting. Doakes seems satisfied that Dexter's odd behavior and apparent drug use can be explained by traumatic experiences as a career police officer.
Debra continues to struggle with the trauma of her experience with the Ice Truck Killer combined with all the people recognizing her as the "Ice Truck Killer's" girl. For a sense of safety and comfort, she stays with her brother, another new source of stress in Dexter's life.
Throughout Season 2, Dexter is pursued by Special Agent Lundy, while both Debra's affection for Lundy and her confidence in her own detective skills grow. Doakes' suspicions about Dexter are revived, and he ultimately discovers Dexter's collection of glass slides containing blood sample souvenirs from all of his victims. The possibility of matching the slides hidden in Dexter's air conditioner with the bodies of the Butcher's victims sets up a climactic episode in which Doakes confronts Dexter at a drug dealer's remote cabin. Despite receiving a gunshot wound in the leg, Dexter overpowers Doakes and keeps him locked in the cage inside the cabin while he begins to frame Doakes as the Butcher. Lieutenant LaGuerta, Doakes' former partner, is the only one who believes in Doakes' innocence. She finds evidence of Doakes' innocence and takes it to Lundy, but he tells her that the evidence is tainted by her previous failure to report Doakes' telephone conversation to the investigation team. Lundy rejects LaGuerta's case files, though he believes she may be correct about Doakes' innocence.
Near the end of the season, Doakes escapes from the cage temporarily and is recaptured by Dexter after being threatened by two drug dealers. Dexter struggles with his life as a serial killer, thanks to revelations throughout the season regarding Harry Morgan, his foster father. Dexter learns that Harry was sleeping with Dexter's biological mother before she died and that Harry took his own life after walking in on Dexter in the middle of a murder, unable to deal with the reality of the monster he had created. With his confidence in the Code of Harry and himself destroyed and exhausted from having to maintain his "mask" for so long, Dexter plays out the possible resulting scenarios in his head of turning himself in. Dexter's events on his last day of freedom include having Deb review his will, having a final dinner with her, and taking Rita and the kids out on the boat. During the "last meal" with Deb, he realizes how much she depended on him to resolve her feelings about the murder attempt by the Ice Truck Killer and decides to continue with his original plan of framing Doakes as the "Bay Harbor Butcher."
In the season finale, Lila finds the cabin where Doakes was imprisoned and causes a propane tank explosion, blowing up both Doakes and the corpse of one of Dexter's victims and preventing Dexter from being named as a serial killer. Lila then meets with Dexter, expecting him to accept her love now that she knows his dark secret. She catches him preparing to kill her and seeks revenge by trying to kill Rita's children and Dexter. Dexter manages to save the children and escape and then exacts his own revenge on her after she has fled to Paris. In the closing scenes, Doakes' memorial service goes largely unattended, with the exception of LaGuerta, Dexter, and Doakes' immediate family. Expressing the logic of Dexter's mental world, the final words in the series are a voice-over of his thoughts on the recent events. We hear that he now considers himself the master of the techniques his father taught him. Dexter believes this combined with the fact that Harry knew himself to be wrong about the code gives Dexter the right to rewrite that code and to live his life the way he wishes. He also states that he now needs those relationships that he originally cultivated as disguises in order to fit into society, even though they make him vulnerable. He considers himself, "An idea transcended into life."
Season 2 premiered on September 30, 2007. On July 17, the first two episodes of the season were leaked on the internet, and on December 4, the last two episodes were also leaked. On November 4th, 2007, the Writer’s Guild of America started a strike, but writer Daniel Cerone stated in the L.A. Times that Season 2 had already been completed in anticipation of the WGA’s action.