The fifth season takes place in 2036, 24 years after the conclusion of the fourth season; in 2015. Numerous Observers from the 27th century, having made the Earth uninhabitable in their own time, traveled through time to take over the Earth from humanity, instituting a Purge to kill off a large fraction. The remaining humans are tamed in an Orwellian manner by the Observers and their human Loyalist collaborating soldiers, though an underground resistance still eludes capture by the Observers. A common scene used through this season is one where Peter, Olivia, and their young daughter Etta enjoying a picnic on the day of the Observers' arrival and conquering of the Earth in 2015; Etta goes missing in this scene during all the confusion and destruction. Walter had been warned of this by September before the Observers' appearance and, with his help, devised a plan to defeat the Observers in the future, scattering key elements across various locations and leaving messages for the future on video tapes in his lab, which he then encased in amber to protect their discovery.

Peter's actions of using the Wave Form Device to create a bridge between the two universes have caused him to erase himself from the timeline; a new timeline, in which young Peter was not saved by September after falling through the ice of Reiden Lake in 1985 after Walter's crossing, is set in motion. Despite the absence of Peter, the bridge has created a healing effect on the parallel universe, and both Fringe teams resolve their former differences and work together on cases.

Following Peter's rescue from the parallel universe, the prime universe Fringe team comes to learn of the Wave Sink Device, the machine that Walternate was attempting to use to destroy the prime universe. They are unaware that Fauxlivia has replaced Olivia, and she works to help the Fringe Division to identify the components hidden across the globe for a similar Wave Form Device in the prime universe. She also gets romantically close to Peter. Olivia is held in Walternate's laboratories in the parallel universe, and given drugs and conditioning to make her believe she is Fauxlivia, and subsequently a willing test subject for Walternate's tests of the powers of Cortexiphan. Olivia slowly breaks this conditioning, and on one trial, is able to cross over to the prime universe to relay a warning to Peter about Fauxilivia. Her identity exposed, Fauxilivia is extracted back to the parallel universe by Walternate's shapeshifters, while Olivia gets help from Broyles to cross back to the prime universe. Olivia is distraught after her return, knowing about Peter's relationship with Fauxilivia. However, after some time, the two reconcile and admit they have feelings for each other.