Lydia Karenin arrived in Port Charles and it was immediately revealed that she was supposed to marry Nikolas Cassadine. Stefan Cassadine managed to persuade Lydia's dying grandfather to bequeath $20 million to Lydia and Nikolas if they marry. The bizarre part of this was that Nikolas didn't know Lydia at the time. Stefan needed Nikolas to marry Lydia, but Nikolas was in love with Emily Quartermaine. Worried that Emily would ruin his plans, Stefan sent out Darius to kill Emily. Darius accidentally killed Lucky Spencer's girlfriend, Summer Halloway, instead. Lydia walked in on Stefan berating Darius for killing the wrong woman. Stefan told Lydia that if she said anything that he would pin the whole thing on her. Due to this, Lydia kept quiet about what happened on that night.
Stefan managed to convince Nik to marry Lydia, but Nik told Stefan that he would never forgive or respect him again. Lydia then found her future brother-in-law Lucky Spencer hard to resist. Lucky and Lydia kissed and Nikolas walked in on them kissing. Lydia covered by slapping Lucky. Lucky said to Nikolas that he wanted to expose Lydia for the true cheat that she was so Nikolas would be free to be with Emily. Throughout marriage plans, Lydia began to develop genuine feelings for Nikolas. However, it wasn't vice versa because Nik still loved Emily. To grab more of Nik's attention, Lydia faked a suicide attempt by taking a few pills and pouring them down with vodka. Lydia was found and taken to the hospital by Nik and Lucky. Nik and Lydia were then married later on in the same week.
Throughout her marriage to Nik, Lydia began to slowly fall in love with her husband. However, Emily and Lydia were like oil and water; they didn't mix. Emily and Lydia sparred a lot over Nikolas. Later, Nikolas and Lydia discovered that, in order to inherit the millions, they must have a child together. This put extra pressure on everyone who was involved in this ordeal.
One day, Lucky Spencer was looking for justice in Summer's death. So Lydia betrayed Stefan by recording a conversation with Stefan in which he admitted to killing Summer. This recording was enough to get Stefan arrested and put on trial for murder. Despite this, Lydia was still desperate to get Nik to cooperate in Stefan's plan for them to inherit the money. When Zander and Emily got married, Lydia seemed to have a chance to get Nik to cooperate. However, Zander and Emily's marriage didn't stop Nik and Emily from getting intimate. On a stormy night, Nik and Emily almost had sex, but didn't.
Despite this, a mysterious person from outside took pictures of Nik and Emily getting intimate. Nik later told Lydia that he wanted a divorce from her. While outside, alone, Nik was mugged and Emily found him injured. Lydia visited Nik at the hospital and told him that he had to stick with the plan because the creditors would kill him if he didn't. However, Nik still wanted the divorce. Lydia then received photos of Emily and Nik getting intimate. Horrified, Lydia showed Zander, who lost it. Zander beat up Nikolas while he was still at the hospital. Lydia packed her belongings and moved into Lucky's room above Kelly's Diner.
When Stefan got off scot-free for Summer's murder, a murderous Luke Spencer returned to Port Charles after he was absent for weeks. When Summer died in June 2003, Luke was initially blamed for it. Luke fled Port Charles for Switzerland, where he supposedly tried to see his beloved Laura, who had been institutionalized there months before. With Luke back, Stefan found himself in a lot of trouble. Luke plotted revenge against Stefan for killing Summer. First, Luke kidnapped Stefan and tied him up in a warehouse. Next, Luke gathered up all the people whom Stefan had hurt during his time back in Port Charles, consisting of Nikolas, Emily, Zander, Lydia, and Alexis Davis (Stefan's sister and Nikolas' aunt).
Luke went on live television and he hosted his own mock trial for Stefan. Luke planned on exposing Stefan's lies to get justice for Summer. Everyone in Port Charles could witness the trial on their own television set, and most of them did. When it was Lydia's turn to testify against Stefan, she admitted that she seen Stefan berating Darius for killing Summer instead of Emily. Towards the end of the trial, an emotional Stefan admitted that he did indeed kill Summer. Ultimately, Luke was arrested for performing this illegal trial.
Lydia agreed to give Nikolas the divorce, and she sought comfort from Lucky. However, it wasn't all over yet. In the study of the Wyndemere Castle, Stefan kidnapped Lydia and tied her to a pole. Stefan suggested to Lydia that they have sex to conceive a child, and then they could pass it off as Nikolas's child. Lydia refused to go along with the plan. When Stefan was absent for a second, Lucky arrived and tried to free Lydia. However, Stefan came back and knocked Lucky unconscious. Stefan tied Lucky up in the study of the Wyndemere, and returned to where Lydia was tied up. Meanwhile, Luke arrived to find Lucky tied up. Lucky told Luke that Stefan had Lydia, and Luke went to rescue her. When Luke arrived, Stefan took Lydia hostage.
Lydia did managed to escape Stefan's grasp, and she ran off. Luke and Stefan had a final showdown on the same cliff Summer fell from. Luke and Stefan got into a fight with a knife, which resulted in Stefan getting stabbed. After receiving the stab wound, Stefan fell from the cliff and died. At Stefan's funeral, the infamous Helena Cassadine - Stefan's mother - arrived to celebrate Stefan's death. Helena practically insulted everyone at the funeral. Helena told Lydia that Anton would be disappointed in her lack of perseverance... and style.
Lydia and Lucky were drinking coffee at Kelly's and she told him that she was reluctant to return to Europe because she was supposed to be rich when she returned. Lucky told Lydia that that gave her more reason to stick around Port Charles, and the two shared a dance together. At the Halloween costume ball, Nikolas met up with Emily and told her that his divorce with Lydia was finally final.
Lydia had gotten close to A.J. Quartermaine after her divorce from Nikolas was finalized. When A.J. was the CEO of ELQ, he emptied his family members' bank accounts. After doing so, A.J. and Lydia left Port Charles and went on to spend time in a tropical paradise enjoying the Quartermaines' money.