Buffy searches newly rented houses for the Trio's hideout and the three discover her on their surveillance equipment, when she gets a bit too close. While they hide in the basement, Andrew Wells calls on a demon that attacks Buffy and starts a fight. The demon grabs Buffy and stabs her with a needle-like part of its body. In a mental hospital, Buffy cries out as she's held by two orderlies and stabbed with a needle. Buffy wakes up alone outside the Trio's house, hurt and confused and walks home.
Willow prepares herself for talking to Tara, but spots Tara greeting another woman with a quick kiss and Willow walks away, wounded. Tara notices her retreating, but it's too late to chase after her. At the Doublemeat Palace, Buffy works like a zombie, and flashes to the mental hospital where a doctor announces it's time for her drugs. Willow and Buffy talk about Xander's disappearing act and Willow's attempt to talk to Tara. Xander surprises the girls by showing up at the house, and wonders about Anya and how to repair his relationship with her. The girls tell him Anya left a few days ago and try to reassure him that everything will work out in time.
Buffy runs into Spike at the cemetery and they talk about the events of the wedding that didn't happen. A confrontation begins between Xander and Spike and as Willow tries to break it up, Buffy gets weak and collapses. Xander manages one punch to Spike before his attention is drawn by Buffy. At the mental hospital, a doctor informs Buffy that she's been hallucinating in the hospital for the past six years and everything she knew to exist in Sunnydale isn't real. She's shaken and confused, especially when both of her parents appear, and then Buffy falls back into the Sunnydale world.
Willow and Xander get Buffy home and she recounts what she saw and was told at the mental hospital. While Willow organizes a plan to research, Buffy falls back to the 'reality' of the mental hospital, where her doctor explains to her parents that she's been catatonic from schizophrenia for all of the past six years (except for the brief period of lucidity which Buffy dimly remembers as her time in "heaven") and that her life as the Slayer has been an elaborate improvised hallucination she has constructed for herself in her mind, explaining what Buffy realizes is its extreme improbability and illogicality compared to the 'mental patient' scenario.
In Sunnydale, Warren Mears and Andrew Wells return to their hideaway with boxes after leaving Jonathan Levinson alone. Leery, Jonathan questions the contents of the boxes and tries to leave the house himself. Warren doesn't agree with that idea and convinces Jonathan to stay in the basement.
Willow shows Buffy a picture of the demon that stung her and tries to comfort her friend. Buffy confesses to Willow that in the beginning of her Slayer life, she told her parents about vampires and was put in a clinic for her supposed insanity. Buffy wonders if she's still there and Sunnydale really doesn't exist, but Willow assures her that isn't true. Xander and Spike patrol for the demon that hurt Buffy and between the two of them, they subdue the demon with force and tranquilizer darts.
Dawn comforts Buffy who dazedly notes that Dawn has been misbehaving and the problems need to be dealt with before 'coming to' in the hospital, where her mother reminds Buffy that Dawn doesn't exist. Dawn realizes through Buffy's babbling that she's considering this, and rushes from the room. Xander and Spike manhandle the demon into Buffy's basement chaining it while Willow breaks off its stinger to make the antidote which she must synthesize without using magic.
Later, Willow presents the antidote to Buffy in a mug and leaves her to drink it as Spike delivers a selfish monologue urging her to abandon the life that's grown so hellish for her and choose peace with him. This misfires, convincing Buffy to reject the antidote (which she pours unnoticed in the trash) and with it, the 'delusion' of being a Vampire Slayer. In the hospital, Buffy tells the doctor and her parents that she wants to be healthy and rid of thoughts about Sunnydale. The doctor tells her that she has to do what is necessary to destroy the elements that draw her back there, like her family and friends, to truly be healthy.
Willow and Buffy are talking in the kitchen. Xander arrives at the house and finds Buffy alone in the kitchen. He talks to her about Spike and his obsession then she knocks him out cold and drags him into the basement where Willow is already bound and gagged. Buffy finds Dawn upstairs and chases her through the house as Dawn pleads that she is real. Dawn is bound and gagged in the basement with the others and with the chained demon.
In the mental hospital, the doctors urge Buffy to make her task easy on herself, so Buffy unchains the demon in the basement to kill her friends for her. Xander pleads with Buffy to free his hands, but she retreats under the stairs. Meanwhile, Tara shows up at the house and finds everyone in the basement. She uses magic to free Willow and Dawn and attack the demon, but the demon is too strong for them. Buffy grabs Tara, making her fall down the stairs and knocking her unconscious. At the hospital, Joyce encourages Buffy to fight against the Sunnydale reality, telling her that she has the strength to fight against the harshness of the world and must fight it because she has people who love her. Buffy, inspired by her mother's mis-chosen words, takes her advice to "believe in" herself literally, and embraces a life of suffering in the nightmarish Sunnydale reality, thanking her mother and saying goodbye to her forever.
Buffy wakes up in Sunnydale to save her friends. She dispatches the demon easily and reconciles with her friends, urging them to quickly make her that antidote while she stays on guard against relapsing again, completely resolved. We cut back to the hospital for the final scene before end credits, where Buffy is still sitting in her corner of the room, now completely unresponsive as the doctor shines light into her pupils. He tells Buffy's heartbroken parents that she's "gone," as the camera pulls away out of the room; Buffy has succumbed to her illness.