Reuben, the Doctor and Vince race out into the fog to help the survivors of the crash, leaving Leela to keep the foghorn going. The Doctor stops to pick up a rope and sees an electric discharge off the generator. He hesitates but Reuben calls out for him to follow.
Leela takes great delight in sounding the foghorn over and over. After a while, the light comes back on.
The three men wade through the fog with lanterns. Vince notices the light back on and Reuben laments that it wouldn't happen with oil. The Doctor nods that "it" needs electricity.
Leela, bored with the foghorn, goes to the balcony. She looks down and sees a green tentacled creature moving on the rocks.
Three survivors are brought to the lighthouse. A rich businessman named Palmerdale, an older dignified man named Skinsale and Palmerdale's young pretty assistant Adelaide. Palmerdale wants a brandy but Vince suggests hot soup instead. Reuben goes to the lamp room while the passengers take off their life jackets and huddle around the stove.
Leela tells the Doctor about the luminous creature. Reuben overhears as the Doctor advises her not to tell anyone. He then tells the Doctor he knows what they saw - the Beast of Fang Rock.
Palmerdale demands some clothes and brandy but Vince tell them alcohol is not allowed in the lighthouse. The Doctor returns and asks about Captain Harke. He is told Harker stayed behind to secure the boat. Skinsale explains that Harker's seamanship saved them all but the Doctor asks who got them on the rocks. Skinsale looks at Palmerdale significantly.
Skinsale asks the Doctor if he's in charge and the Time Lord replies with a grin that he's full of ideas. Vince goes to stoke the boiler and the Doctor sends Leela with him.
Adelaide asks why he's sending women to stoke boilers. The Doctor explains that a keeper was killed and Vince doesn't like going down there alone.
The Doctor is introduced to everyone. Palmerdale is a financier, Skinsale is a member of Thurley. Palmerdale is eager to get to South Hampton to get to the stock exchange. The Doctor tells him this is impossible and Skinsale laughs that maybe Palmerdale didn't win all he thought at the casino.
As Vince stokes, Leela hears something being dragged on the rocks. She sends Vince to get the Doctor and grabs a shovel as a weapon. But it is only Harker dragging a body inside. The Doctor comes down and examines the body -- all that's left of Ben. Harker laments what the seas does to a man but the Doctor says the sea didn't do it. He sends Harker away and closes the door.
Leela asks if the Beast of Fang Rock ate him but the Doctor says there is no such thing. Something did a post mortum on him to study human anatomy. He hides the body as Vince comes down. Vince is alarmed but Leela assures him again that the dead do not walk.
Palmerdale wants to set out for the mainland once Harker is rested. His companions are appalled and Harker outright refuses. Palmerdale threatens to fire him but Harker is unmoved. "Hang him from the yard arm, Henry, it's mutiny," quips Skinsale.
The Doctor tells Vince that Ben was just stunned. He walked out onto the rocks and was drowned. This seems to placate the young man. Leela asks the Doctor why he didn't tell Vince the truth and the Doctor explains that he doesn't know the truth.
Palmerdale is now raving that the lighthouse is responsible for the crash, and so they should get him to South Hampton. Skinsale and Harker tell him they would have hit no matter what. The Doctor returns and tells them to stay in the lighthouse. Palmerdale thinks the Doctor is crazy and Adelaide doesn't like Leela. Skinsale calls up to see if Adelaide can get a room and Reuben tells them to try the bunks in the sleeping quarters.
Vince sees lights in the fog and Reuben opines that it's the Doctor and Leela. He warned them about the Beast of Fang Rock. Vince is skeptical but Reuben tells him Leela saw it. He explains that the last time it was seen was 80 years ago -- and it left two men dead, the other mad.
The Doctor and Leela creep through the fog. The Doctor puts a compass down where Leela saw the creature and watches as the needle swings around in a powerful electrical feld. Leela shows him the dead fish. The Doctor isn't sure what's out there but it is desperate and cunning. As they leave, a green glow follows.
Skinsale comes back, having put Adelaide to bed. It becomes clear that he gave some information on stocks to Palmerdale, who can't take advantage of it. Palmerdale threatens to expose him anyway but Skinsale points out that without proof, the "jumped-up moneygrubber" wouldn't be believed over a gentleman.
The Doctor and Leela return to the lighthouse. The Doctor now thinks Vince's fireball was a spacecraft. Some creature has been scouting them -- something that needs electricity. He locks the lighthouse door and explains that it created the fog to isolate them and will soon attempt to destroy them. Leela is ready to fight it but the Doctor points out the others will think they're mad if they start talking about aliens.
Palmerdale scribbles out a message as Skinsale sleeps. He wakes Harker and asks him to telegraph it to his brokers. But Harker remembers how desperate he was to get London and how many sailors died when the ship struck. He assaults Palmerdale and Skinsale and the Doctor have to pry them apart.
The Doctor then says, with a grin, "This lighthouse is under attack and by morning we might all be dead. Anyone interested?"
The green thing closes in on the tower.
Reuben comes to the lamp room and tells Vince to stoke the boiler again but the young man is now concerned about the beast and the parallels between what's happening to them. Vince is shaking and Rueben kindly offer to stoke the boiler.
The Doctor tells the crew that no one is to leave. Reuben arrives and tells them about the Beast of Fang Rock, which makes Palmerdale laugh. Leela threatens to cut out his heart if he doesn't listen to the Doctor. But then she notices that it's getting cold. Skinsale doesn't sense anything but the Doctor assures them that her senses are very acute. The lights dim as Adelaide arrives.
Reuben notices the lights fade and shakes his head. He crosses hismelf and opens the coal hole.
In the crew room, the lights go out and Reuben's ghastly screams echo through the tower.