Dawn helps Willow move into her new room at the Summers' house while giving her advice on how to fit in with people at school. Buffy and Xander contribute to the effort as well while talking about Anya. Buffy wonders about Anya's evil intentions, but Xander thinks she's getting better and isn't a threat. At a frat house, dead male bodies litter the room, each one with his heart ripped out. Anya Jenkins sits on the floor, covered in blood and in complete shock from the killing she's done.
Flashback (in grainy early-days-of-film archival-footage style) to Sjornjost, Scandinavia, 880 A.D., a pre-demon Anya, named Aud, cares for her husband Olaf after he returns home from what he claims has been a hard day of fighting trolls, although she doubts him. She waits on him, promising requested sex after he's eaten, and rhapsodizing about "the sense of accomplishment that stems from selflessly giving of yourself to others" and her plan to give away free meat to the villagers (both attitudes contrasting with her present-day miserliness). She clearly worries obsessively about whether he's rewarding her selflessness with infidelity.
In the present-day school basement, Spike talks to Buffy about his mental struggles and remembers Drusilla. Buffy is warm and reassuring, but this Buffy is shown to be an illusion as without cutting the camera pans to the real Buffy entering and coming upon Spike, who has not moved but is exasperated and clearly alone. She insists that she must take Spike out of the basement and away from whatever is making him so crazy down there.
On the college campus, Willow talks an old professor into reinstating her in class and sees Anya leaving one of the fraternity houses in a trench coat. Anya's very distant and claims she's dating one of the frat boys before quickly rushing off. Willow spots a streak of blood on Anya wrist before she runs off and goes to investigate the building. Willow finds the frat house full of blood and corpses: there is a young co-ed whimpering in the closet that she "takes back her wish." She tearfully explains how in response to a cruel fraternity stunt she made a rhetorical wish about "having their hearts ripped out," which a giant spider demon immediately materialized to carry out. The spider attacks Willow and the girl, but she uses dark magic to hold it at bay, actually making a harsh "Dark Willow"-style comment to the girl (and manifesting her Dark Willow black irises) before tossing the spider through a window and comforting the girl, her normal self again.
In another flashback to Sjornjost, 880, Anya watches as Olaf, who she's magicked into a troll in punishment for cheating on her, runs from a mob of villagers seeking to kill him. Vengeance Demon D'Hoffryn is there in his full demon appearance and praises her magical skill and vengeful resolution. D'Hoffryn insists that Aud is a born vengeance demon, Anyanka, and offers to make her one in reality, which she accepts.
At work, Buffy receives a call from Willow about the frat house and the spider demon. Meanwhile, Halfrek is in Anya's room praising her return to enthusiastic vengeance while Anya expresses regrets. Willow barges in and orders Halfrek out. Anya rejects her assistance and considers Willow a poor judge following her excesses in Season 6. Buffy and Xander search the woods for the spider demon and are surprised by it as they inspect another of its victims - the spider nearly kills Buffy before she tosses it and kills it in a prodigious feat of axe-throwing.
Buffy and Xander return to the Summers house and find Willow waiting with an explanation about where the demon originated and the damage it caused. Xander blows up at Willow because she didn't tell them, but realizes she delayed because now Buffy will have to kill Anya.
In a flashback to 1905, Anyanka and Halfrek drink champagne in a banquet room full of massacred men as the city of St. Petersburg, Russia, burns outside the window. Anyanka accepts Halfrek's compliments for starting the Russian Revolution, but rejects her offer to go celebrate, as her work (wreaking vengeance) is all she is or wants (humorously she sees the success of revolutionary communism as inevitable and desirable, again in contrast to her ardent present-day capitalism).
Back in the Summers home, Xander furiously denounces Buffy's plan to kill Anya. He insists Buffy always protects demons she loves, but Buffy reminds him how she killed Angel at the end of Season Two because it was necessary, and asserts that as Slayer her judgments regarding demons are absolute: "I am the law." Xander insists there must be another way and rushes off when Buffy advises him to get busy finding it. She takes weapons from her cache and leaves to find Anya alone, Willow pleading that she can't bear to accompany or help.
Left on her own, Willow rushes to her room and uses the summoning talisman that D'Hoffryn had given her three years prior. D'Hoffryn is happy that Willow has called him as he'd been impressed with her flaying of Warren Mears and her surrender to hatred as Dark Willow (which he'd sensed her returning to that afternoon). He assumes Willow has called to accept the role of a vengeance demon, but Willow insists she's called him to discuss Anya's recent actions, which he resignedly agrees to do.
Xander finds Anya at the fraternity house but Anya rejects his help, reminding him of his breach of promise of marriage, which he insists isn't a good excuse anymore. Buffy arrives and after Anya turns demon-faced and throws Xander aside, attacks her. They seem matched until Buffy impales Anya through the chest with a sword. In a sudden, wistful flashback, we see a moment occurring during 2001's Once More, With Feeling musical episode with Anya bursting into a (magic-induced) solo musical number about how her future role as Xander's 'missus' is now all that she has to define her. In the present, Anya comes to, and, impervious to such apparently mortal injuries, rips the sword out. Buffy fights the sword away from her and gets another shot at using it when Xander tackles her away from Anya.
Suddenly D'Hoffryn appears, interrupting the battle. He first approvingly inspects Anya's scene of carnage in the other room, then reminds Buffy that attacking him is futile (she desists). D'Hoffryn compliments Xander's gallantry and Willow's solicitousness, and notes Buffy's bloody-minded resolution, but concludes by asking Anya what she wants to do. Anya asks to undo her act of vengeance, which is possible as her victims died "mystical deaths." Anya insists despite D'Hoffryn's warnings that the price would be the life and soul of a vengeance demon (she assumes her own) and over Xander's impassioned protests. D'Hoffryn surprises all by rapidly summoning and annihilating Anya's vengeance demon friend Halfrek, explaining that he wants Anya to suffer in guilt as punishment for betraying him: "Never go for the kill when you can go for the pain!" Assuring them that the coming threat will kill them all anyway (reminding them that "from beneath you, it devours"), D'Hoffryn teleports away, having brought Anya's victims back to life and restored Anya to her human form.
Hurt and scared, Anya walks out alone, but Xander follows. She voices her dread at now facing life for the first time without a role to lose herself in, as a vengeance demon, a girlfriend, a wife or even a businessperson, claiming she's always been without a self of her own (as per the episode title). Xander argues with this and tries to comfort her, but backs regretfully away so that Anya, walking off tearfully in the opposite direction, can face her future, as she insists on doing, herself.