The episode opens on a girl fleeing down a street from someone. She stumbles, allowing the pursuer to catch up. The figure holds her and runs a finger with a metal claw over it down her cheek, carving a cross into it. Once that's done, he bites her and drains her of blood. The camera's view moves over the figure's head and it looks very much like Angel. He wakes up in a cold sweat. Meanwhile, detective Kate examines the body and comments it's "like all the others".
The next morning, Cordelia is practicing talking to clients when Angel comes in, cranky about her looking up a license plate. Cordelia suggests Angel try asking Kate for the favor. Angel, distracted, tries to leave by the front door and almost bursts into flame. After he leaves, Wesley enters with their mail and tries to find out if Cordelia and Angel have noticed anything sinister going on, but Cordelia has nothing for him and tells him he's brought in the wrong mail. Wesley notices something that seems familiar and frightening on the front page of the newspaper he has. Angel goes to the police station to talk to Kate and notices the crime scene photos, which call up haunting images of his dreams. After that, Wesley confronts Cordelia about the fact that the recent murders match Angel's MO. Cordelia is skeptical until Angel himself admits it might be him, dreaming. They chain him to his bed to test the theory. That night, instead of dreaming about a current murder, he dreams about his past when he had just turned a vampire named Penn. He realizes the killer is Penn and resolves to tell Kate, despite Wesley's objections.
Angel goes to Kate and talks to her in private. He reveals he knows about the victims being drained of blood, and gives Kate a sketch of the vampire's face and a clue about who and where he'll strike next. On his way out, he steals a police radio so he and Wesley can intercept the police before they confront the vampire. Kate's task force find Penn in the act and force him into an abandoned warehouse. Kate goes in alone to capture him, while Angel and Wesley drive to the building and Angel sneaks in. Kate finds and shoots Penn, but he gets up and attacks her until Angel interrupts. Penn expects Angel to be on his side until Angel attacks him and mentions his predictability. Penn escapes and Kate is confused. Afterward, Angel confronts her and tells her to leave Penn to him because she doesn't know what she's dealing with.
A montage follows Penn planning his next attack, Kate researching, and Angel wandering the streets looking for him. Angel ends up at Kate's apartment, where she reveals she now knows about vampires and particularly his past. She mentions Penn's previous visits to Los Angeles, which Angel takes as a clue. Meanwhile, Penn confronts Cordelia in their offices. Cordelia surmises his identity and has him cornered with Angel until Wesley walks in and Penn uses him as a hostage. After he escapes, The three use his previous visits to discern Penn's lair in an oft-remodeled hotel. Angel and Wesley go and find his next target should be a bus of schoolchildren. Kate is prepping her task force for apprehending Penn when he reveals that he's in the room and attacks them all, then chases after Kate. Kate runs and Angel intervenes, citing the schoolchildren as too obvious a decoy. They fight until Penn has Angel in a lock with Kate holding an oversized piece of wood. She jabs it through both of them, missing Angel's heart but killing Penn.
Afterward on a rooftop, Cordelia tells Angel she had a vision, but he is worried about his nature, since he enjoyed the dreams of hunting and killing. She tells him his actions count, not his dark internal issues, though she promises to stake him if he becomes a problem.