In time, Phyllis' many machinations caught up with her. Her dangerous schemes and Daniel's true parentage were exposed. Phyllis lost not only her husband, but custody of her son, too. The salt in the wound was that opposing counsel in Phyllis' court case was none other than Danny's ex-wife Christine. A dalliance with attorney Michael Baldwin wasn't enough to heal Phyllis' wounds, however, so she left town. The following year, Phyllis, now versed in the ways of the web, returned to Genoa City and soon found herself a new beau and husband in "Smilin'" Jack Abbott. Alas, the couple's romance was impeded by conflicts between Jabot Cosmetics and Newman Enterprises (Phyllis' sometime employer).

Phyllis, who suffered a miscarriage and became unable to carry another child to term, faced additional heartache when she was suspected of nearly killing Diane Jenkins (the mother of Jack's son Kyle) in a fire. Eventually, Phyllis was cleared, but she and Jack divorced over the stress of outside forces. Even though Diane faded from the scene, Phyllis took on a new rival, this time in business, with Drucilla Winters. Later, Phyllis was reunited with Daniel, now a teen, when he returned to town. Phyllis went after Daniel when he fled the state after he mistakenly thought that he'd accidentally killed young Cassie Newman. Swallowing her pride, Phyllis asked her old nemesis Christine to defend Daniel, which she ultimately successfully did. During this time, Phyllis allowed herself to lean on Jack once more. The formerly married couple attempted to make a go of their union again.

Phyllis threw a wrench into her renewed relationship with Jack by entering an affair with Nick Newman, Cassie's dad and Jack's former stepson. Almost unable to help herself from taking on another self-destructive relationship, Phyllis carried on with Nick (and appeared to develop true love for him) for several months until Sharon got wise to the adulterous affair. Nick's attempt to repair his marriage with Sharon was cut short when Phyllis discovered she was pregnant. Nick and Sharon decided to divorce, and he began a relationship with Phyllis, eventually proposing to her. Nick and Phyllis married.

During an ice storm, Phyllis gave birth to a baby girl named Summer with the help of Jack when they were both trapped in an elevator. Nick and Phyllis' joy was short-lived when the evil Sheila Carter came back to town, looking exactly like Phyllis (thanks to a trip to a plastic surgeon)! After kidnapping and terrorizing new mothers, Lauren and Phyllis, Sheila was shot by Lauren and the two friends and their babies were rescued. Trouble came knocking again when Nick's plane went down and it was feared that he was dead. Eventually, Nick was found alive but suffering memory loss. In fact, he didn't remember his relationship with Phyllis at all. Nick thought he was still married to Sharon and that Cassie was still alive. In the midst of all this turmoil, Phyllis stood trial for blackmailing Brad over his affair with Sharon. Nick, seeing Phyllis with Summer, began to remember his feelings for her and supported her throughout the trial. Phyllis was sentenced to several years in prison. Her new cell mate turned out to be Carmen Mesta's killer, Jana Hawks!

In 2007, Phyllis was paroled and eventually released for good. Nick and Phyllis found their way back to each other and began a new magazine called Restless Style with Jack and Sharon Abbott as their partners. It was Nick's way of proving to his father that he could be successful on his own. But Jack's meddling caused friction between the partners and Nick bought the Abbotts out. Nick and Phyllis are determined to make the magazine a success.

Nick flew to Paris to find his father, who had left town over his grief of the loss of his wife Sabrina. Nick was worried about his father's depression. Sharon was also in Paris with Noah, who was on a school trip. Nick and Sharon decided to explore the City of Love together. When Phyllis flew to Paris to surprise Nick and to supervise the cover shoot for Restless Style, she witnessed Nick and Sharon kissing on a bridge. She quickly flew home to Genoa City, trying to figure out how she was going to deal with the situation. Nick and Sharon returned and the chemistry between the two made Phyllis crazy. She finally confessed what she had witnessed. Nick promise to work at their marriage but when Noah was rescued by Brad from almost drowning in an icy lake, Nick went to find Sharon.

Sharon decided to separate from Jack when she returned to Genoa City and decided to spend some time alone in the Abbott cabin where Nick found her. A ranger informed Nick and Sharon that the roads were closed. After he told her about Noah, the two had emotional moment remembering the loss of their daughter Cassie and ended up making love as a snow storm raged outside. When the storm passed, the couple were jolted back into reality and headed back to see Noah. Phyllis realized that she may have lost her marriage thanks to her manipulations, which included egging on Brad to rekindle his affair with Sharon, leading to his death.