On stardate 41723.9, the USS Enterprise has rendezvoused with a Ferengi vessel in the Xendi Sabu system. After hours of waiting, Captain Picard, who is plagued by a pounding headache, grows impatient and is ready to leave. The Ferengi finally respond with their Captain, Daimon Bok, requesting to meet Picard face-to-face aboard the Enterprise in one hour.
Picard goes to sickbay where Dr. Crusher conducts a medical scan. She has no idea what is causing him headaches but gives him something for the pain. In the meantime, Wesley has made modifications to the ship's long range sensors and detects a second vessel approaching. Geordi identifies the ship as an old Constellation-class starship.
Bok transports directly to the Enterprise bridge, along with his first officer Kazago, and second officer Rata. Bok announces that the Federation ship is under his control, a "gift" for the "Hero of Maxia". Confused, Picard is not sure of what Bok is referring to, where Data reminds him that nine years ago, at Maxia, he was attacked by an unidentified aggressor which he destroyed. Bok angrily shouts that ship in question was a Ferengi ship, and Data states the records indicate the Ferengi attacked first.
The viewer magnifies upon the old ship. The hull nomenclature reads: "U.S.S. STARGAZER NCC-2893". Picard is struck in awe for a moment realizing it's his former command. Bok explains they found the derelict adrift, and now offer it as a memento to Picard's "victory" at Maxia. The Ferengi leave, but everyone remains suspicious over their sudden gesture of hospitality.
Picard tells the tale of the incident at Maxia, recalling the final moments when they encountered an unknown ship and offered greetings. The vessel attacked without provocation. The Stargazer suffered heavy damage and as the enemy ship came in for another pass the Captain executed what went down in history as the "Picard Maneuver". Gathering remaining warp power, Picard ordered a short burst of speed ahead of the enemy ship. The effect made the Stargazer appear to be in two places at once and the enemy attacked their ghost, allowing Picard to go in for the kill. Unfortunately, he and the surviving crew had to abandon the ship.
An away team is sent over to the Stargazer finding the ship barely functioning. Picard walks about the devastated bridge, left just like it was when his crew abandoned it. Geordi manages to restore minimal power and Picard decides to visit his cabin, reuniting himself with a chest of personal items. What he doesn't notice is a peculiar glowing sphere hidden inside.
Somewhere on the Ferengi ship, Bok sits at a strange console. Next to him is a sphere identical to the one in Picard's chest. He laughs vengefully as the sphere in Picard's chest glows brighter, and the Captain is struck by another wave of pain. He falls, knocking the chest closed. Beverly comes to his aid and has him sent back to the Enterprise.
The Ferengi finish their transfer of the logs and the Enterprise puts a tractor beam on the Stargazer, deciding to tow the wreck to Xendi Starbase 9. The Ferengi remain with the two Federation ships, offering an uneasy escort. Meanwhile, Picard tries to sleep, but he hears the voices of his old panicked crew and his eyes pop open in terror.
Elsewhere, Data looks over the Stargazer's logs, alerting Commander Riker when he finds a discrepancy. It appears the vessel Picard attacked was under a flag of truce. Riker confronts the Captain, replaying the reports. Picard listens to himself say he mistook a subspace antenna for a weapons cluster. Riker believes the voice has been simulated by the Ferengi. However, without clear evidence, he indicates he has to notify Starfleet. Picard sits dismayed. Riker assures he will do everything he can to prove the logs were tampered with. In privacy, Riker calls over to the Ferengi ship to talk with Kazago, informing him of the suspected tampering of the logs. Kazago believes the humans are trying to cover up their Captain's disgrace and accusing the Ferengi of a crime. He terminates the communication, leaving Riker frustrated.
In the meantime, Picard's headaches grow worse and Dr. Crusher believes it to be connected to the emotional stress he has been under. Picard tells Beverly that he has been hearing voices, and that he is unsure if he was in his right mind at Maxia, or even if he is in his right mind now. In his lair, Bok sits manipulating Picard's mind. As Picard dreams, he finds himself in the center seat of the Stargazer's bridge, surrounded by fire and apparitions of his former crew. He replays the incident demanding the aggressor identify themselves. With no response he orders a counterattack.
Elsewhere, Data and Geordi report to Riker with evidence that the Stargazer logs were faked. The forger forgot the proper timecode stamps, proving the logs are a deliberate fabrication. Picard suddenly appears and oddly seems back to normal. Riker informs him of the log tampering, but the news barely affects the Captain who orders Riker to disable the tractor beam on the Stargazer.
Dr. Crusher tells the Captain he should be resting, but Picard informs her that his headaches are gone and that he can return to duty. The doctor meets with Troi, wondering about the Captain's peculiar recovery. Troi feels something odd in the Captain; overlapping patterns of thought and disorder in his mind. Suddenly, Wesley interrupts them. He shows them a strange frequency he detected coming from the Ferengi ship. When compared to the model of Picard's brainwaves, the frequency model is an exact match. Beverly and Troi race to Riker informing him they believe the signals are affecting the Captain's judgment. Alarmed, Riker asks for a location of the Captain and the computer indicates he beamed to the Stargazer.
On the Stargazer's bridge, Picard finds Bok waiting for him. The Ferengi activates his sphere causing Picard to wrench back in pain. Bok says he is "collecting on an old debt" explaining that the ship Picard destroyed was commanded by his son. He has been searching for years for a proper revenge. He has spent a lifetime of riches to acquire the mind control devices. Picard struggles for control, as Bok sets the sphere on a seat. He utters, "Die well, Picard", then transports away leaving the Captain alone with the menacing sphere.
Back on the Enterprise, Tasha Yar and Worf rush to Picard's quarters and locate the sphere in the Captain's chest that was brought over from the Stargazer. They bring it to Riker, just as the Stargazer raises shields and maneuvers away. They look over the sphere knowing it must be connected to the thought-altering transmissions. Tasha warns the Stargazer has powered up weapons and maneuvering to attack.
Riker calls over to Kazago, demanding an explanation of what is going on. Kazago seems just as confused, but once shown the mind sphere, he becomes suspicious. He explains the sphere is "thought maker", a forbidden device, suggesting Picard is criminal to own one. Riker insists that Bok is involved and demands to speak with him. Kazago refuses to question his DaiMon and to Riker's annoyance, cuts off communication. On the Stargazer, Picard takes his old command chair and now sees the Enterprise as the unknown threat.
Back on the Enterprise, Riker tries to talk sense into the Captain. Picard replies "Do not attack, we are on a peaceful mission." They hear him relay orders to his imaginary crew then communications cut off. Fearing the Picard Maneuver is imminent, Riker asks Data what defense there is against it. Data replies that there is none. Riker orders him to devise one, fast!
The Ferengi ship suddenly hails. Kazago informs him his DaiMon has been relieved from command, "for engaging in an unprofitable venture." Kazago refuses to help the Enterprise, preferring not to get involved in their affairs. Data suggests a plan of action against the Picard maneuver, suggesting he can detect the immediate compression of stellar gases... but time is running short and Riker cuts him off; whatever plan Data has composed, it will have to do.
The Stargazer makes its abrupt jump to warp, and for an instant, appears in two places at once. Data deflects the ship with the forward tractor beam and the force nearly knocks Picard from his command seat. He hears Riker calling for him. Dazed, he responds. Riker tells him to look for a silver sphere and destroy it. In a zombie daze, Picard finds the sphere. He hesitates, then wills himself to blast the sphere with his phaser. He is finally released and quickly comes to his senses. Picard then requests to be beamed back home.