Kelso starts cheating on Jackie in Season 1 and lusts after Eric's sister for a while. They start making out a couple of times and sleep together when Kelso gets his van and Laurie is bored. This goes on for a while and Jackie finally finds out when Kelso ends it with Laurie and she sees them kissing.
Kelso puts all of his energy into getting Jackie back, but when it doesn't work he starts dating Laurie, much to Red's dismay. Laurie actually fights to be able to stay with Kelso, chiefly as he is her main distraction from her life going nowhere. Eventually Laurie cheats with Kelso and Kelso realises what he did to Jackie and apologises to her. They break up off-screen.