The Doctor is practising his juggling when a junk-mail satellite materializes inside the TARDIS, inviting him and Ace to the Psychic Circus on the planet Segonax and taunting Ace when she seems reluctant to participate, claiming that she finds circuses boring and clowns creepy. Eventually she gives in to the drone's hectoring and to the Doctor's enthusiasm and agrees to go. Segonax, however, is not the green and pleasant world they'd been led to expect from the brochure; instead it's an arid wasteland, and the only native visible -- a fruit vendor -- isn't happy to see them and seems distrustful of strangers. Nevertheless, the Doctor purchases some foul-tasting fruit from the vendor and forces Ace to eat it all to prove that they're trustworthy folk.

Two frantic circus performers, Bellboy and Flower Child, run in terror from Flower Child's formerly innocent kites, which are now leading the macabre Chief Clown and his silent clown sidekicks to the fugitives. Bellboy and Flower Child reluctantly agree to split up, and while Bellboy tries to attract the kites' attention, Flower Child continues on and eventually reaches an abandoned hippie bus. But as she tries to open a box she finds inside the bus, something walks up behind her and strangles her to death, chanting "hold tight, please".

The vendor remains unhelpful, as does motorcycle vandal Nord, who's also passing by on his way to the circus. The Doctor and Ace are nearly run down by the Chief Clown's silent Bentley hearse as it speeds across the dunes in search of Bellboy; the Clown catches him by the vendor's fruit stall, and gloatingly tells him that it's too late for Flower Child. Meanwhile, another arrival lands on the planet -- the chirpingly adolescent Whizz Kid, who's also on his way to the Circus.

The Doctor and Ace meet the hearty galactic explorer Captain Cook and his punk companion Mags, whom the Captain obscurely refers to as a "unique specimen". Ace helps Mags to unearth a buried robot which then comes to life and tries to kill them all, although the Captain seems unfazed and continues drinking tea while the Doctor saves the day. Further along, they come across the hippie bus and are attacked by the robot Bus Conductor, the same creature which killed Flower Child earlier. Again, the Doctor saves the day, destroying the Conductor when the Captain sets it on him, and the Doctor and Ace disgustedly part company from the self-centred Captain, who continues on ahead of them with Mags. Before leaving the bus, Ace finds Flower Child's lost earring and pins it to her jacket.

Ace is caught off guard when the Chief Clown, in full glittery costume, leaps out of the tent and beckons them inside. In the tent's lobby area, the Doctor chats with Morgana about the Psychic Circus, which was founded by hippies who wanted the freedom to express themselves artistically; they used to travel the galaxy, but they've gotten settled in her since... Morgana doesn't complete her thought, and seems reluctant to allow the Doctor and Ace on into the ring, but when the Chief Clown arrives, gleefully beckoning them onwards, Morgana seems to change her mind. As Ace passes the Clown, he notices Flower Child's earring on her jacket.

Inside the tent, the Doctor and Ace find that they're the only audience members and that the show hasn't started yet. As their eyes grow accustomed to the light they see a family of a Dad, Mum, and Little Girl who sit stoically in the bleachers, eating crisps and ice lollies and waiting for the show to start. It eventually does, and as the Doctor studies the memorial stones embedded in the circus ring and Ace nervously watches the acrobatics of the android clowns, the Ringmaster strides out into the centre of the ring and announces that the talent contest is soon to start -- and the Doctor has been selected to participate.

Ignoring Ace's pleas not to go, the Doctor leaps into the ring, and is escorted backstage -- into a cage in which Nord, the Captain and Mags are also trapped. The Chief Clown, meanwhile, confronts Ace, demanding to know where she found the earring, but she pushes past him and is chased into the depths of the tent by the clowns. She finds the emotionally and physically shattered Bellboy strapped to a desk, and hides as the Clown arrives to take Bellboy back to work repairing his creations, especially the Bus Conductor.

The Doctor practices juggling and notices a strange look in the eyes of the circus' idiot janitor Dead Beat. The Captain and Nord flip coins to decide who's going to go on first, and the Captain cheats to ensure that Nord is selected. Nord is brought on to entertain the Family, and proves a hit when he demonstrates his great strength by lifting barbells; when he tries to tell a joke, however, he fails miserably, and a blast of energy disintegrates him. Upon witnessing this the Doctor and Mags join forces to trick their clown guards and escape, but the Captain remains behind in the cage, for reasons of his own.

Ace hides in the lobby and witnesses a confrontation between Morgana and the Ringmaster; Morgana is having second thoughts about their new role in life, but the Ringmaster is only concerned with filling the auditorium with new acts. Ace accidentally gives herself away and the Clowns chase her into the tent again; Morgana starts to follow but is interrupted by the Whizz Kid, and eventually, worn down by his single-minded enthusiasm, ushers him into the tent. The Ringmaster takes him to the cage and discovers that the Doctor and Mags have escaped. Ace, meanwhile, sees the clowns carrying something through the tent corridors, but is too far away to see that it's the repaired Bus Conductor. She is then captured by the Chief Clown and thrown into a dark room with several half-finished clown robots, which begin to stir to life about her...

The Captain professes a total lack of interest as to what's going on in the Circus. As they leave the cave Mags stares at the moon sigil and begins to growl, and the Doctor escapes while the clowns are trying to keep her under control. The Doctor returns to the lobby, where he sees that the eye from the well has appeared inside Morgana's crystal ball. Dead Beat wanders into the lobby, sees the eye, clutches a medallion about his neck and flees in terror. The Doctor, sensing that Dead Beat may be the key to what's going on, follows and tries to question him; Dead Beat doesn't answer, but motions for the Doctor to follow him. When Morgana finds the eye in the crystal ball she realizes that the powers they now serve will never let them free, and, terrified, pledges to serve them loyally and unquestioningly from now on.

Ace is saved from the clowns by Bellboy, who explains that he created them as objects of fun before they were abused by the circus' current management and went wrong and evil. Everything Bellboy created has been turned to evil, including the giant robot which had to be buried because it was too dangerous, and the Bus Conductor, which he now realizes has killed the woman he loved. Dead Beat leads the Doctor to Bellboy and Ace, and Bellboy remembers that Dead Beat used to be the leader of the circus; his name was Kingpin, and he led them to Segonax in search of something powerful which went horribly wrong. The Doctor decides to lead Dead Beat back to the well to see what happens, and Bellboy decides to remain behind and delay pursuit. He gives Ace the control unit for his giant robot as a parting gift, telling her that he'd rather die than live on doing work he hates. When the Chief Clown arrives to take the others into custody, Bellboy states that he won't serve them any more, and sets his own android clowns on himself as the Chief watches disbelievingly.

The Captain and Mags are returned to the cage, and the Chief Clown decides to send the Captain into the ring next as punishment for failing to capture the Doctor. However, the Whizz Kid instantly recognizes the Captain as one of his heroes, and, to Mags' disgust, the Captain takes advantage of this to convince the Kid to go into the ring first in his place. The Kid lasts less than fifteen seconds before being disintegrated.

Mags attacks the Doctor while the Captain whips her on, explaining that, like the hippies who first ran the circus, he'd heard rumours of ancient forces on Segonax, and has come to strike a deal with them and gain their powers for himself. He's convinced that he can succeed where Kingpin failed, but even as he drives Mags on, the Doctor is trying to convince her that she can control her feral instincts. Caught and confused, Mags eventually turns on the Captain and kills him. The Family have never been so entertained.

Ace and Dead Beat reach the bus, where Ace is attacked by the repaired Bus Conductor while trying to reassemble the medallion. As they struggle, Dead Beat picks up the missing piece of the medallion and snaps it back into place, and his mind returns to him. Kingpin once more, he helps Ace to destroy the Bus Conductor once and for all, and they set off to bring the completed medallion to the Doctor.

The Doctor and the recovering Mags flee the tent as the Family, their eyes glowing brightly and their voices reverberating, demand more entertainment. The Chief Clown prudently leaves the ring as Morgana and the Ringmaster try to placate their masters; realizing that the circus folk have no one else to sacrifice in their place, the Family disposes of them and calls on the Doctor, demanding his return. The Doctor has no choice but to head back to the ring, telling Mags to run ahead and fetch Ace and Kingpin. She is pursued by the clowns, but Ace leads them into a trap; as the Chief Clown approaches with his army of clowns wielding murderous juggling clubs, Ace uses Bellboy's remote control to reactivate the giant robot, which guns down all the clowns.

The Doctor, trying to enter the ring, passes through a dimensional gateway and finds himself in the Dark Circus of the Gods of Ragnarok. The Gods demand entertainment and kill those who do not satisfy them, and the Doctor has come to Segonax to stop them once and for all. He entertains them for a while with a repertoire of magic tricks and storytelling, and then stops his story in the middle and refuses to continue. As the Gods prepare to destroy him, he waits for the right moment...