The Doctor and his companions arrive in London, 1976, in search of a man named Danny Pain who supposedly saved the world from an alien invasion. Pain turns out to be a moody 17-year-old in a punk band named Plasticine, and the Doctor has Benny join the band to keep an eye on him -- and also, he later admits, because he heard her voice on their debut album before he ever met her on Heaven. He can no longer speak to Ace without arguing, and therefore leaves her to her own devices while he searches for evidence of the coming invasion. There are no clues to be had, however, and when he tries to enlist UNIT’s help they fail to recognise him and place him under arrest. The Brigadier arrives, but he too seems to have no idea who the Doctor is, and orders Major Carpenter to interrogate him. RSM Benton, however, learns what is happening and helps the Doctor to escape; there is something wrong at the heart of UNIT, but Benton is confident that the Doctor will put things right. The Brigadier, claiming to Carpenter that he cannot spare any other men, puts the American Captain Pike in charge of the hunt.

UNIT is particularly busy keeping the peace, as an anarchist movement named Black Star is bombing public sites and inciting riots which are tearing London apart. Robert Bertram, the head of Priory Records, is planning to broadcast a world-wide benefit concert to promote the cause of peace. He records Plasticine’s first public gig and offers to sign them up to his label, and although Danny wants no part of the music biz -- and in fact intends to distribute his friends’ bootleg copies of the concert -- he reluctantly goes along with the rest of the band and agrees to sign up. Ace attends the concert and sees Bertram discussing something with a thin man, but she is unable to hear what they are saying. After the concert, Ace goes home with Danny and ends up crashing on his couch, surprised that he doesn’t want to sleep with her. She inexplicably shares Danny’s dream of a red woman in a burning field -- an Earth Goddess whom Danny claims to have offended. Meanwhile, Black Star blows up Big Ben, and during the ensuing riots, the TARDIS -- which the Doctor had materialised around Nelson’s Column -- transforms into a miniature Statue of Liberty, causing further confusion and unrest. The Doctor finds that someone has remotely reprogrammed his chameleon circuit, and reflects the transmission back to its source; but he is still no closer to identifying his enemy.

Ace accompanies Benny and the band to Priory Records, where Bertram tells them that he intends to release their debut album on the new medium known as Compact Disc. Ace steals the demo CD and gives it to Benny, telling her to show the Doctor. To cover the theft, the band throws Bertram’s desk out of the window, and it is stolen from the street by Danny’s anarchist friends, who intend to put it in an art gallery as an exhibit. Bertram takes the theft in good humour, and signs up Plasticine to his label -- but as the others depart, Ace lags behind and asks him point-blank how he’s managed to invent the CD ten years early. Bertram admits that he is a time traveller named Mortimus who has come to warn the world about the invasion, but he asks her not to reveal his presence to the Doctor. Ace admits that she no longer likes or trusts the Doctor, and when she learns that Mortimus used to be a monk she asks him to forgive her sins. He is touched, sensing a connection between them; they were both betrayed by the people they most believed in.

Benny meets more of Danny’s anarchist friends, including a former UNIT captain named Mike who now seeks to alert the world to the threats that the government has covered up. Bertram’s desk vanishes from the gallery where it was installed, but Danny has already taken a sheet of paper from one of its drawers as a souvenir. Meanwhile, the Doctor searches for clues in the streets, but Mortimus has removed all of the hints left by the Doctor’s future self, leaving him helpless. Ace is turning against him, UNIT is on the hunt for him, and as the Doctor searches vainly for help he is caught up in a riot and fails to save the life of a young student crushed to death by the stampeding throng. Only Benton still trusts the Doctor to find out why UNIT has changed so much since Robert Bertram installed the new virtual reality training equipment…

Mortimus hypnotises Ace and has her shoot at the Queen during a public appearance. The Queen is only injured, but as her bodyguards usher her to safety an even more violent wave of rioting breaks out. The Doctor rescues Danny and Benny from the heart of the riots, and, desperate for clues, asks Danny for his autograph. Danny signs the piece of Priory Records notepaper which he’d taken from Bertram’s desk, and gives it to the Doctor. The Doctor and Benny are then reunited with Ace, who accompanies them to UNIT HQ; there, Benton smuggles them in for a look at the new VR training room. It appears to be using VR technology far too advanced for the 1970s; a blank white room is replaced with an utterly convincing jungle, and UNIT troops are sent into battle against aliens in the form of shining silver blurs. Benny sees Major Carpenter talking to the blurs, but gets a bit too close to them, and one of the blurs attacks her, knocking her out with an electric shock.

Ace catches a glimpse of a woman dressed in red, and follows her through the jungle to a gothic gateway where Mortimus is waiting. He has abandoned his three-piece suit for his Monk’s habit, and has abandoned all pretense of being here to warn the world. He is in fact helping the aliens to invade, and Ace, who has had more than enough of the Doctor, agrees to help. In return, the Monk promises to use his new powers to alter history and restore Ace’s lover Jan Rydd to life. Ace departs to consider his offer, but is distracted by a trail leading to a forest cottage -- where the woman in red lies chained up on a bed, begging Ace to find a way to free her.

Benny wakes with a terrible headache, to find that the Doctor and Benton have been captured. The Brigadier and Pike apparently plan to take them to Geneva for questioning, but as their helicopter flies over Salisbury Plain, Benny has a vision of the helicopter as the target of cross-hairs. She wrenches the pilot aside, and the missile which had just been launched at the helicopter only grazes it. Most of the occupants survive the crash, but the Brigadier shoots the navigator through the head before he can call for help… and tells the Doctor and Benton that he and Pike have been aware for some time that UNIT has been infiltrated by telepathic aliens. Inspired by the Doctor’s example, the Brigadier has been studying Buddhism, and was thus able to recognise and resist the subliminal influences exerted through Bertram’s training equipment. He merely pretended not to recognise the Doctor, so that he could arrange their escape and they could join forces with UNIT’s covert Broadsword division to continue the fight away from the compromised UNIT HQ.

The Doctor and his friends are then captured by the Black Star terrorists, including artist Julie Quinlan and former UNIT captain Mike Yates. Quinlan threatens to torture Benny to force the Brigadier to admit that UNIT has committed recent terrorist outrages itself to discredit Black Star. The Doctor tries to convince her that both UNIT and Black Star have been infiltrated by aliens who are using them to spread anarchy and leave the Earth defenseless before their invasion, but Quinlan refuses to listen to him and leaves them all tied up in a cottage rigged to explode when UNIT troops arrive to recapture them. The Doctor then realises that Benny is being possessed by one of the aliens from the training room, and leaves the Brigadier to save them all from the bomb while he joins minds with Benny to help her fight the possession.

The Doctor and Benny find themselves in the Mediasphere, the home of the human race’s zeitgeist and the invaders’ base of operations. While searching for the aliens who have invaded the human collective unconscious, the Doctor and Benny meet the Good Neighbours, the Tomorrow People, Dad’s Army, and the eccentric time traveller Professor X. Professor X, who knows himself to be a fictional character, transports them to the centre of the Mediasphere, where the Doctor and Benny discover the invaders to be Vardans. The Vardans taunt the Doctor and prepare to kill him, but since Benny is not from this century the fictions of the Mediasphere do not have the same hold on her that they would on someone from this time and place. By reciting names from Martian literature and temporarily uploading her mind into the TARDIS’ telepathic circuits, the Doctor breaks the Vardans’ hold over her, saving her life.

Pike frees himself from his bonds and releases the Brigadier, who resets the timer on Quinlan’s bomb, giving himself and his friends just enough time to evacuate into the cellar after the UNIT soldiers break in. As the Doctor and Benny awaken, the bomb goes off, burying them all in the cellar, but the Doctor queries why Quinlan would wish to destroy the whole house just to get them, and deduces that she was trying to bury something else. He thus locates a secret tunnel which leads out of the house and into another Black Star hideout, where Doyle, the man who loosened Pike’s bonds, is waiting for them. Some time ago he killed an apparent traitor within Black Star, only to find that the body wasn’t human; he thus believed the Doctor’s claims, but knew that Quinlan would never listen without proof. Black Star was founded by artists who had discovered subliminal messages in the world’s media, conditioning the public into obedience and submission, but Doyle now believes that the signals were planted by aliens and not by the establishment. Quinlan arrives and is furious to find that Doyle has apparently betrayed her, but before she can execute him half of her troops, including Yates, reveal themselves to be undercover Broadsword agents. The Doctor calms everyone down before they can start shooting, and although it isn’t easy, the Broadsword agents manage to convince Quinlan that they’re on the same side. Quinlan reveals that Robert Bertram has been funding Black Star and supplying them with advanced combat technology. The Doctor is beginning to suspect that he knows Bertram’s true identity, but he has no idea what to do about it, or how to save anybody.

Mortimus gets himself named as UNIT’s new scientific advisor, and he and Carpenter convince the Prime Minister to declare the Brigadier and his men a Foreign Hazard. They are now legally classified as hostile aliens, and can be shot on sight. Meanwhile, Ace bids goodbye to Danny, knowing that she’s entering the most dangerous part of the game, and Danny finally admits to her why he’s so angry all the time; about a year ago, he tried to seduce a girl who’d just told him that she had once been raped, and he has never forgiven himself for it. He also tells her about an odd dream he had after signing up with Priory Records; he dreamt that he woke in the middle of the night and saw something changing shape in his jacket pocket, but when he really woke up the next morning, it was just the Priory Records notepaper from Bertram’s desk, which he later signed and gave to the Doctor. Ace leaves Danny to his own devices, while she and Mortimus prepare to set a trap for the Doctor.

Quinlan leads the Broadsword agents to Stonehenge, where Black Star intended to capture one of the dilettante Druids and hold him hostage -- but Quinlan is killed by a Vardan disguised as one of her friends, and their Warboy satellite link fails to alert them to the presence of UNIT helicopters. The “Druids” turn out to be Vardans, and as they and the possessed UNIT troops attack Black Star and Broadsword, the Doctor sees the Monk at the centre of the stone circle, preparing to sacrifice Ace to the goddess Artemis. He rushes forward to save her -- and as the horrified Benny watches, Ace slams a knife into the Doctor’s chest and drags him into the sacrificial altar, which is in fact the Monk’s TARDIS.

All the Monk has ever wanted is to make history better, and he’s always been punished for it, while the Doctor meddles just as much as he ever did and is seen as a hero. Now, the Monk and Ace have their revenge on him at last. The Monk seals the Doctor in a cylinder of oxygenated liquid and abandons him on the ice planet where the Monk himself was trapped for so long; now the Doctor will share his and Ace’s pain forever. Satisfied, the Monk returns to Earth to complete his work, and is taken aback when Ace reveals that he never successfully hypnotised her; she did everything she did for him because she chose to of her own free will. Delighted, the Monk promises her that once the invasion is over he will rescue Jan from the Hoothi; together, they will set off to explore the Universe and right wrongs. As he prepares to put the last phase of his plan in to motion, Ace returns to Danny’s squat; she’s been too busy to sleep, and she wants to know if the woman in red has appeared in Danny’s dreams instead. As it happens, she has, and has told him that something in Ace’s dreams will set her free. Ace returns to the Doctor’s TARDIS, finally understanding what it is she needs.

Just as the Vardans are about to wipe out their enemies, Black Star’s Warboy gives off a shrill warbling sound which incapacitates the Vardans. Pike disappears in the confusion as the Brigadier and his troops retreat, but he is later reunited with them in London. Benny leaves them to their resistance and returns to the TARDIS to mourn the Doctor’s death, but she encounters Ace inside and in a fit of rage tries to shoot her. Ace retreats through a door which was created when this TARDIS was reassembled from her memories, and Benny follows her to find herself in a simulation of the planet Heaven. There, Ace surprises her, knocks the gun out of her hands and leaves her dangling over a cliff edge while she departs with a temporal baffle which was left here for her to find. Just as Benny is about to fall to her death, the Doctor unexpectedly shows up and rescues her. He promises to explain how he escaped as soon as he has time, and Benny then discovers that the ground beneath the cliff was impossibly soft; even if she had fallen she wouldn’t have been killed.

Mortimus attends an emergency meeting of the Cabinet, and claims that his technical staff have invented a ray which beams alpha waves directly into the human brain. If used during his benefit concert, it will pacify the riots breaking out all over the world. The few dissenters change their minds when Mortimus uses the ray on them -- and nobody thinks to question whether such a device could have been used on a different setting to cause the riots in the first place. Satisfied, the Monk returns to Priory Records, and finally shows Ace the source of his power to change history -- a captive Chronovore named Artemis, which the Monk lured into a trap some time ago and sealed in a temporal containment unit. Since the Chronovores live outside Time, the laws of causality do not apply to them. The Monk used Artemis to break open the time loop around the Vardan homeworld, and offered to help them gain their revenge against the Time Lords by conquering the Earth, a strategically vital planet in this timeline. To ensure that the Doctor did not interfere, the Monk used Artemis to kill the Doctor in a former incarnation; when that failed, he used her to change aspects of the Doctor’s past in order to keep him distracted while the invasion proceeded.

Benny takes the Doctor to Broadsword’s base, where he shows them a video he stole from the Monk’s TARDIS -- a record of a history where he defeated the Vardans, and which the Monk used to locate and destroy all of the hints which the Doctor’s future self had planted for him to find. The vital clue was to be found on Plasticine’s debut LP, which is why the Monk signed them up and released the recording of the concert on CD -- a digital format in which he could edit out the information which will save the world. Fortunately, Benny knows that Danny’s friends bootlegged the concert on tape, and she convinces Danny to give a copy to the Doctor. The Monk has stolen the Doctor’s TARDIS, and the Doctor and his friends must therefore break into Priory Records in order to find a mixing station. The Monk’s TARDIS is once again disguised as his desk, but thanks to the Monk’s childish attempt to sabotage the Doctor’s chameleon circuit -- and the fact that the Doctor responded to it by reflecting the beam back to its source -- the desk’s structure is unstable, and the Doctor is able to break in.

Unfortunately, the Monk has left a Vardan on guard inside, but before it can kill the Doctor, Pike reveals himself to be a Vardan as well, and kills the attacker. Certain that the others won’t understand, Pike transports himself back to UNIT HQ in a flash of light. There, he meets Ace, who is returning to the VR-jungle to free Artemis, since she can’t bypass the safeguards within the Monk’s TARDIS and do so directly. Pike explains to her that he’s working from within to overthrow the military dictatorship which rules his home world, and that he has been protecting the Brigadier and Broadsword by generating electrical interference which prevents the Vardans from reading their thoughts. Now that he’s blown his cover, however, his fellow Vardans will know that he has betrayed them. He therefore decides to accompany Ace to the cottage in the woods, where the woman in red is waiting -- and when Ace activates the temporal baffle, Artemis’ bonds begins to loosen.

In their energy forms, the Vardans are susceptible to certain sonic wavelengths, but while the Doctor was able to save his friends at Stonehenge by broadcasting a signal through the Warboy he was unable to expel the Vardans from the Earth. But once he uses the Monk’s mixing station to edit out the extraneous sound from Plasticine’s concert, he overhears Major Carpenter telling the Monk that the music is similar to the sonic weapons used in the Vardan civil war. Bertram’s broadcast is about to begin, and an army of Vardans is assembling on the moon, preparing to use the Priory broadcast satellites to transmit themselves into millions of minds already softened by months of subliminal conditioning and civil unrest. As the concert begins, however, Broadsword helps Plasticine to break into the BBC and storm the stage, and as the soldiers hold off the furious Carpenter and his UNIT troops, Plasticine begins to play the chords which the Doctor had given them. The Doctor has recovered his TARDIS and taken it to the Priory satellite, where he sets up a standing wave between the BBC transmitter and the satellite, trapping the Vardan army within the carrier signal. But moments before Carpenter is drawn into the beam, he breaks into the studio and shoots the Brigadier, killing him.

Mortimus takes his TARDIS to confront the Doctor, who can barely contain his rage at the man who has robbed the Doctor of all he holds dear and pushed him to the brink of despair. To the Monk’s shock, the Doctor reveals that the knife with which Ace stabbed him was a pantomime dagger she’d taken from the TARDIS’ theatrical supplies; she never intended to betray the Doctor at all. The furious Monk prepares to use Artemis to erase this defeat from history and try again, but before he can do so, Artemis snaps free of her containment and prepares to take her revenge. Mortimus, stunned, realises that Ace never intended to travel with him; when she realised that Artemis was blocking his attempts to hypnotise her, she decided to string him along until she could find a way to stop him.

Artemis intends to devour the world now that she is free at long last, but the Doctor pleads with her to be merciful, and she agrees to spare the world for Ace’s sake; however, she refuses to restore the Brigadier to life. Grateful for Ace’s help, she offers Ace a chance to change history. Ace, who has had enough of guilt, anger and recrimination, chooses not to save Jan, but to show up in person to rescue the Brigadier -- instead of releasing Artemis. The Doctor, humbled by her choice, offers to settle his differences with the Monk, but the Monk rejects him and flees back to his TARDIS, intending to start all over again. Instead, he finds Artemis waiting for him; in this version of history, she was freed by Pike. Amused by Ace’s cleverness, Artemis spares the Earth and lets the Vardans’ defeat stand, but takes the Monk with her, to make him pay for her imprisonment.

The Doctor explains that the piece of paper which Danny autographed was in fact a part of the Monk’s TARDIS, which had fallen off due to the structural instability caused by the reflected chameleon circuit transmission. It was still connected to the ship as a whole, however, and the Doctor was thus able to use it to escape from the cylinder on the ice planet. The Doctor finally makes his peace with Ace, who has shown him what it’s like to be used as a pawn. Artemis has left an alternate version of Heaven in the TARDIS for Ace, but she chooses to turn her back on the past and explore the real Universe instead. The Doctor hypnotises the Brigadier to forget their adventure and retire from UNIT, knowing that his friend needs time to heal and that his brand of soldiering will mean nothing in the hard decade to come. He then takes Ace and Benny to 1994, where they find that Danny has finally learned to forgive himself and has become a cult hero due to the stories about the invasion in the underground press. Before leaving 1994, the Doctor takes a hammer to the TARDIS’ chameleon circuit, freezing it in the shape of a police box once again. He and his friends then set off for another exciting adventure.