The episode begins with a typical horror-movie shot from the POV of the villain, seeing a ballet dancer (Emily) as a demonic voice whispers "I will be flesh". Cordelia is singing "Greatest Love of All" off key, as part of the try-outs for the talent show. Giles stops her, obviously to stop his ears from hurting. Buffy, Xander and Willow join Giles, and mock him as he complains that the new Principal (which he refers to as the FÃ¼hrer) made him in charge of the talent show, despite his wishes, so he could have more contact with the students. As Snyder overhears the Scoobies making fun of Giles, he punishes them by forcing them to participate in the talent show. The next try-out is Morgan and his dummy, Sid, and Buffy confesses to being freaked out by dummies. Morgan's act takes a sudden turn for the better when Sid suddenly develops a personality and starts making sarcastic comments about the act. The scene cuts to Emily, who notices the demon (unseen by the audience watching her) and screams.
The talent show rehearsals continue with Marc, an unsuccessful magician. Buffy, Willow and Xander debate what to do for the talent show, and settle on a dramatic scene, since it does not require any actual talent. Sid watches, and makes rude comments as Morgan explains the voice is an imitation of his father. Snyder explains to Giles that he will run a safer, more disciplined school, only to be interrupted by the discovery of Emily's body, whose heart has been cut out with a knife. The Scoobies debate whether the killer is a demon or a human, eliciting Willow's comment that a human murderer is scarier since it could be anyone - even her.
Principal Snyder's unexpected fan popularity has made him appear in the first four seasons, and referenced in the final three.
The Scoobies split up and begin interviewing people from the talent show to find the killer. In a quick montage of the interviews, they all point in the direction of Morgan and his dummy, Sid. They decide to check Morgan's locker after school hours. As Buffy is busy breaking into Morgan's locker, and finding nothing, Snyder finds her almost red-handed, and admonishes her for being in the school after hours. Morgan and Sid turn out to be hiding, watching Buffy. Sid tells Morgan that Buffy is "the one", saying that her strength is evidence of it.
As Buffy goes to sleep, Sid waits until the lights are off and sneaks into her room. When she wakes up, he quickly scampers out. Naturally, Buffy has a hard time convincing the Scoobies that Sid broke into her room. Giles, on his part, suggests that the demon responsible might be needing the heart (and later, a brain) to keep a human guise, which means the demon could be anyone, once again. When a teacher confiscates Sid, Xander steals him so that Buffy can talk to Morgan alone. As Buffy searches for Morgan backstage, Snyder is again displeased with her being where he does not think she belongs.
In the library, just as Willow finds references to another possible explanation - animated dummies might harvest organs to become humans - Sid is gone when Xander stops paying any attention to him. The scene cuts to Buffy, finding Morgan's body, missing a brain, just as a chandelier falls on her. When she wakes up, Sid attacks her, and during their fight they realize they are both working for the same goal: to stop the demon.
Sid explains he is a demon hunter, cursed to dummy form until he kills the last of the Brotherhood of Seven, those demons which harvest a heart and a brain. Realizing the demon has what it needs, they theorize it will be moving on, and so it will be whomever is missing from the show. Sid suggests to Giles to form a "power circle" to find out who is missing, but Giles sees everyone there. When Sid is again missing, Buffy finds Morgan's brain when she looks for him. Buffy, Willow and Xander discover Morgan had brain cancer - which is probably the reason the demon did not use his brain, and is now looking for someone smart. This means that Giles and Willow are in danger.
At the talent show, Marc the magician tricks Giles into strapping himself into a guillotine, ostensibly a magic prop, so that he can take his scalp off and get his brain. Buffy, Xander and Willow rush to rescue Giles, and with Sid's help they manage to kill Marc - who was the demon all along - and save Giles just as the curtain goes up. Everyone assumes it is part of the show, though there is only minimal clapping. The episode ends with Buffy, Xander and Willow performing a scene from Oedipus Rex with remarkable lack of talent, and with Willow running away from the stage.