As the Doctor, Harry and Sarah depart from Skaro, the time storm caused by their alteration of history disrupts the path of the Time Ring, and they are scattered across the Adelphine Cluster just outside Earth's galaxy. Harry materializes in a war zone on the planet Jand, where he leaps into action to save lives during a battle, and earns the respect of the goatlike Jand for his medical expertise and willingness to save the lives of both friend and foe. Sarah, however, materializes on a moon of the enemy planet Averon, where she is captured and put to work in a slave camp. Escape is impossible and the dulling routine of the camp soon saps even her spirit.

The duration of the war is having its effect on morale in the Landoran Alliance's secret weapons manufacturing facility, Deepcity. For security reasons nobody is allowed to leave Deepcity, and even top scientist Cara Tarron -- whose brother Brin was killed when Landor was destroyed -- is suffering from "Deep Syndrome" after having pushed herself to complete the MICA project ahead of schedule. While investigating reports of an opulent golden ship which has been sighted on the outskirts of recent battles, Alliance vessels find an escape pod in Deepcity's space. The pod and its occupant, the Doctor, are brought to Deepcity, where Director Kambril determines that he belongs to a technologically advanced but unknown species and asks for his assistance. The human colony on Landor was destroyed in the early years of the conflict with the Averonian Union, and the scattered survivors have been lending their help and expertise to their own allies in the continuing battle. The Doctor, suffering from partial amnesia, agrees to help develop a weapon that will put an end to the war.

The Landoran Admiral Dorling delivers a stirring speech to the Jand which stirs even Harry's hatred of the evil Union. The Jand have developed a device capable of tracking Averonian ships through hyperspace, and hope to convince the Landorans to test the machine in one of their ships, thus locating the mysterious source of Averonian weapons, and cutting off their supply route. Harry accompanies Dekkilander Chell'lak to a meeting with a Landoran officer, Gillsen, who patronisingly dismisses the Jand's claims, refuses to risk a cruiser on such a mission and demands that Harry be turned over the Landorans for interrogation about his true origins. This provokes a fight between the Jand and the Landorans, and with Harry's help, the Jand knock out Gillsen and steal the Landoran cruiser Oranos, intending to test the tracking equipment themselves.

Cara shows the Doctor around Deepcity, and he realizes that the weapons technicians have become detached from the emotional consequences of their work. Neels Prander, apparently Deepcity's resident artist and film-maker, is in fact creating subtle propaganda to remind the people that their cause is just and aliens are not to be trusted. Furthermore, there's something not quite right about the architecture of the file room. Nevertheless, the Doctor sets to work building a device which he claims is weapons-related. Admiral Dorling arrives to deliver another of his rabble-rousing speeches, but the Doctor later breaks into Dorling's quarters and confronts him, suspecting that he isn't all he seems. "Dorling" admits that he is in fact an actor, Oliver Malf, who was hired to take the pressure off the real Dorling at these public engagements. The Doctor questions Malf about the use of penatholene gas, but Malf has no idea what he's talking about and the Doctor leaves, satisfied that Malf is an innocent pawn. Malf, puzzled, checks his encyclopaedia and learns that penatholene gas leaves people open to suggestion and emotional manipulation. He takes offense as an actor, and threatens to reveal his true identity unless his minders stop using the gas on his audience and start treating him with respect.

Two prisoners on the Averonian slave moon drive a truck into the camp's power pylon, temporarily shorting out the power to the implants which keep the prisoners confined within the limits of the camp. Sarah removes her implant before the guards can repair the damage, but, realizing that there is nowhere to escape to on the moon, she instead hides within the hollow body of a robot trooper being sent offworld for repair. She thus escapes from the moon, but while emerging from her hiding place she accidentally activates a dormant synth-trooper which had shut down to save itself from a virus programme. In order to survive the viral attack the trooper has generated new neural pathways within its positronic brain, and it finds these new pathways inspiring illogical new connections in its mind. Sarah encourages this, realizing that the trooper has begun, in effect, to think for itself. She gives it a name, Max -- short for Mobile Armed Auxiliary -- and they explore the ship together. Max shoots and kills the crew before Sarah can stop him; fortunately the "crew" were all robotic, but Sarah tells him that from now on he must only kill as the very last resort. Neither of them understands why the ship was crewed by robots -- but it means that the life support system is not up to standard, and Sarah finds she is beginning to suffer from oxygen deprivation. She eventually asks Max to send out a distress signal, but loses consciousness before help arrives.

The Oranos locates an Averonian ship, but as they try to follow it they are attacked by an escort which enters hyperspace almost as if expecting them to be there. At the last moment the mysterious golden ship appears, distracting the Averonians and enabling the Oranos to escape; but Harry is strangely unnerved by the presence of the ship for no reason he can determine. Having hidden out of sensor range, the Jand continue to follow the Averonian ship, only to see that it is heading for Averon itself -- and the impenetrable barrier of defensive satellites makes it impossible to attack the Averon homeworld. It appears that the Jand have gambled and failed, but then they detect an ship leaving the system and realize from its rate of acceleration that it must be nearly empty. Harry points out that the sheer mass of material requied to build the satellite network suggests that the homeworld has run out of raw materials -- which suggests that this ship may be fetching supplies from elsewhere. The Oranos sets off in pursuit, but much to their surprise they begin picking up a distress call from the ship. After some hesitation, they decide to risk docking to investigate, and are just in time to save the cyanotic Sarah. With Max's help, Harry and the Jand repair the ship's life support system, and decide to stow away while the ship continues on to its destination. Most of the Jand return to the Oranos, while Harry, Sarah, Max and Chell'lak remain on the Averonian ship.

The Doctor convinces Cara to distract the guards in Deepcity's file room while he investigates the discrepancy between its size and the length of the corridor outside. He discovers that the file room hides an entrance to a secret section of the base, where he learns that Deepcity is in fact producing double the amount it should be. Malf's oratory, pentatholene gas and Prander's xenophobic propaganda are used to keep the people of Deepcity devoted to their task without noticing any discrepancies. He is captured and taken to the commander of Deepcity, Kambril, whom he accuses of selling out Landor in order to make a profit selling weapons to both sides of the conflict. This is not in fact the case, but it's close enough to the truth that the Doctor must be killed. He is taken to the testing range outside the city, while Kambril sends a synth-trooper to murder the troublemaking Malf; the Doctor will be accused of the murder of Admiral Dorling and will be "accidentally" killed while trying to escape through the test zone.

The Oranos loses contact with the Averonian supply ship when it enters an uncharted asteroid belt. Sarah, Harry, Max and Chell'lak emerge from hiding only to find that, instead of being brought to a secret Averonian base, they're in a Landoran facility. Sarah and Harry emerge from hiding to investigate and meet Brant, one of the Deepcity executives whose doubts about her work have been exacerbated by the cold-blooded murder of Malf and the framing of the Doctor. She agrees to help rescue the Doctor and reveal what's really going on, and leads Sarah and the others to the test range, but Kambril sees them entering and sends in a patrol of synth-troopers. Brant is killed before the Doctor can trigger the machine he's been working on; as well as being a distraction to keep Kambril occupied, it serves to incapacitate the pursuing synth-troopers. The altered Max continues to function, although experiencing some discomfort. He successfully pilots Brant's flitter out of the valley -- only to crash into the sky and plummet back down. Deepcity has been constructed inside a hollow asteroid.

The Doctor and his companions hide in Deepcity's service tunnels, where Harry's casual mention of the TARDIS finally clears away the last of the Doctor's amnesia. He leads them all back to the laboratory, just ahead of the guards, and they enter the escape pod in which he was originally found -- and which is in fact an advanced TARDIS with a fully functioning chameleon circuit, sent to rescue him by the Time Lords. The Doctor uses this TARDIS to rescue the other Jand from the Oranos moments before it is destroyed by "Averonian" fighters. The Doctor finally understands what is really happening to the Adelphine Cluster, and with his friends' help he sets off to collect the evidence he needs to prove his case to the people of Deepcity. While the Doctor is busy, Sarah and Harry speak with Max about his developing sense of self-awareness, and Sarah argues that his sentience makes him responsible for his own actions; he is no longer simply a weapon, but a being capable of -- and responsible for -- his own independent thought. Having located the empty shell of a weapons outpost and a transmitter from which a robot in the form of an Averonian broadcasts Averonian propaganda, the Doctor then tracks down the one man who can provide positive proof of his claims back on Deepcity -- Brin Vender, Cara's supposedly dead brother.

Back on Deepcity, Kambril spreads a cover story claiming that the Doctor was an alien spy and that Brant was a martyr who gave her life to execute him and his alien friends. Cara isn't convinced, but when she enlists Prander in her effort to learn the truth he turns her over to Kambril. Despite her years of service, Kambril decides she wouldn't understand the truth, and sends her to the test valley where she is to be "accidentally" killed during the testing of MICA. Before the test can begin the opulent golden ship arrives, and its owner, the Mogul of Tralsammavar, announces that he has been studying the cluster and its inhabitants for some time, and is now ready to make a deal with Deepcity to purchase synth-troopers. Kambril allows his greed to get the better of him, and allows the Mogul to land in Deepcity and send his weapons specifications to the factory where the synth-troopers are being manufactured. Unfortunately, the golden ship transforms itself into a police box in the middle of negotiations, as the new TARDIS' chameleon circuit has fallen victim to its symbiotic link with its erratic owner...

Realizing that their cover has been blown, the Jand emerge from the TARDIS and seize control of Deepcity's communications network. The Doctor sheds his disguise and broadcasts the truth to the people of Deepcity; Landor was not destroyed in the war, but Averon was destroyed by their retaliation. The worried Landorans hid themselves away behind a defensive barrier, and the authorities spread word that the planet had been destroyed and took over both sides of the war. Thus the other alien races in the cluster have been kept at each others' throats while Landor built up its strength again. Most of the native Landorans are unaware of the deception, and are living peaceful lives on Landor without any interest in the war outside -- which they assume has nothing to do with them.

Kambril manages to escape, and he and his fellow conspirators hole up in an emergency bunker and reprogramme the MICA units to kill everyone in Deepcity, thus eradicating all evidence of their crime. The synth-troopers now being produced by the factory, however, have been reprogrammed with Max's new self-awareness subroutines, thanks to the information the Doctor supplied under the guise of the Mogul of Tralsammavar. At the last moment Malf emerges from the air ducts and opens the doors of the bunker; he once acted in a play in which he had to lie, "dead", on stage for over half an hour, and thus fooled the synth-droid sent to kill him into believing it had done so and hid in the ducts. The synth-troopers capture the bunker, but Max is seriously damaged and is forced to shut down. In his haste to programme the MICA units Kambril resorted to a simple pattern recognition subroutine, and the Doctor is able to outwit it by supplying everyone in Deepcity with masks bearing the faces of the command staff, who are exempt from the MICA's instructions. When the MICA units reach the city they are unable to locate anyone within their targetting protocol, and once they've covered the entire city they shut themselves down, awaiting their next instructions. Cara ensures that they will not be switched on again.

Max reactivates himself, having repaired the damage to his systems, and announces that under his supervision, Deepcity will manufacture an army of self-aware synth-troopers like himself -- an impartial peacekeeping army which will use force only as a last resort to ensure that all alternative viewpoints can be explored without prematurely resorting to violence. As the Doctor, Sarah and Harry prepare to leave, they find a Time Lord waiting for them; apparently the Doctor's symbiotic link with the new TARDIS has so seriously disturbed its psychomatrix that it must be taken back to Gallifrey for extensive repairs. The Time Lord also reveals that in time to come, the synth-trooper army descended from Max will prove vital in the final defeat of the Daleks. The Time Lord returns the Time Ring to the Doctor, Sarah and Harry and sends them back to the Doctor's TARDIS... although there is one more trifling matter to be taken care of first.