Norman Osborn has survived his epic battle with Otto Octavius, which is not great news for Peter Parker. Though Osborn's activities have finally been diminished, his personal connections only grow more complicated. He hires Flash Thompson for another job, and that's to kill Mary Jane. Peter's gut reaction is to try and distance himself from her, hoping it'll put Flash and Osborn off of her.
He lands an apartment with the income he's been making at the Daily Bugle, and a new friend in Gwen Stacy, whom he grows closer and closer to, at the expence of his relationship with MJ, which he's been trying to maintain as much as possible. Peter goes after Flash directly, not just for what Flash has just been contracted to do, but for vengeance against the hitman who stole all the family Peter ever knew.
He actually succeeds to this effect, but as usual, the balance always evens itself, and soon Osborn himself is back in business, and targeting not MJ but Gwen Stacy. In a climactic encounter, Osborn succeeds in murdering Gwen, and Peter's botched rescue attempt obscures what actually killed her. Osborn gets away.
MJ tries to console Peter, who quits his job at the Daily Bugle thanks to further harassment from J. Jonah Jameson, who gleefully ran an editorial definitively blaming Spider-Man for Gwen Stacy's death. Peter reluctantly moves back in with MJ, and reveals his secret to her. She convinces him that he should make one last attempt to bring Osborn to justice.
Flash Thompson, meanwhile, has been arrested for some completely unrelated, and therefore ironic, felonious activities, and realizes during his trial that he can still turn his life around, if only he can make proper atonement. Miraculously, Flash is acquitted, and then he enlists in the army, but not before making a full confession to Peter, who doesn't exactly forgive him, but at least understands when he learns of the leverage Osborn used against Flash in the form of medical bills for his father.
Finally, Peter has one final confrontation with Osborn, and in the ultimate battle between Spider-Man and the Green Goblin, Goblin opts for death rather than rescue from Peter, who can only watch as this chapter of his life finally comes to an end.
Watching from a distance? Kraven the Hunter...
Peter and Mary Jane mend their fences and make a new commitment to each other. Peter decides to give up his activities as Spider-Man as they head toward graduation and college, together.