November, 1940 : London is under nightly attack and a serial killer, the Limehouse Lurker, is literally crushing victims to death. Cody McBride, expatriate American private eye, is drinking himself to sleep when he sees a giant silver sphere crash into the city near his office. He rushes off to investigate, but he's been drinking too heavily and passes out after indistinctly seeing something emerge from the sphere. When he awakens the next morning, the empty sphere has been taken by Major Lazonby of British Intelligence, and McBride is escorted away none too gently by his nemesis, Inspector Mullen. Meanwhile, a nervous businessman named Peddler is confronted at his factory by a man named Wall and two giant trenchcoated figures. Wall leaves his business card for Peddler should he change his mind, but Peddler refuses to have anything further to do with Wall and his associates. But as Peddler works late at night, something crashes through his window -- and comes to life...

The Doctor and Ace contact McBride, having seen his photograph in the next day's newspaper; the Doctor suspects that the mysterious sphere contains alien technology. McBride hears of Peddler's murder, and the Doctor and Ace accompany him to the factory to investigate; there, the Doctor proves to Mullen that the "murder" was committed by a small animal which crawled up out of the sewers and burrowed through Peddler's chest. The Doctor takes Wall's business card from the scene of the crime in order to investigate it more thoroughly, and discovers that it is an electronic beacon containing components too sophisticated for this time period. The Doctor sends Ace and McBride to speak with McBride's criminal contacts and ask about Wall, while he repairs the "business card", activates it and waits to see what will happen next.

At McBride's favourite hangout, "Mama's", an informant named Sharkey directs them to George Limb, "the Professor". McBride has heard rumours that the elderly Limb in fact controls much of London's organised crime from behind the scenes, but Ace is fascinated by the charming old man, who claims to have been friends with Winston Churchill. Limb's political career ended when he took the blame for leaking a vital government document to the press; it had been done at Churchill's request, and Limb didn't want to get in the way of his friend's career. He still has contacts, however, and is able to inform them that the sphere has been taken back to Peddler's factory for analysis. Ace and McBride return to the factory to investigate, just in time to see Wall's trenchcoated associates break in to steal the sphere. Ace and McBride try to stop the figures, who are revealed to be Cybermen, and then Lazonby's forces arrive, forcing Wall and the Cybermen to retreat to their lorry and escape. Ace leaps onto the lorry to follow them back to their headquarters, but McBride lags behind and is arrested by Lazonby on charges of trespassing and espionage.

Mullen, realizing that the Doctor stole Wall's business card, heads to McBride's office and arrives just as the Doctor is attacked by the same thing which killed Peddler -- a Cybermat. Mullen manages to shoot the Cybermat, but realizes that he's out of depth and accepts the Doctor's offer of help. The Doctor follows McBride's trail to Mama's, where he intimidates Sharkey into telling him about Limb. Limb is very helpful, and the Doctor is intrigued to learn that Peddler was engaged in secret research for the British government and experiments to improve soldiers' strength. A chance remark from Limb about the strength of the Limehouse Lurker catches the Doctor's attention, and he deduces that the Lurker is a damaged Cyberman which now requires human blood to heal the diseased biological interface between its organic and mechanical components.

Ace is trapped in an old Victorian pumping station which the Cybermen have reactivated for some reason in order to clear out the sewers around the area. An elderly caretaker who has been trapped in the station for three days helps her to escape, but they are spotted fleeing and the caretaker is shot by the Cybermen. Ace manages to escape through the sewers, but Wall activates the Cybermat army and sends them in pursuit. Meanwhile, as the Doctor tries to convince Mullen to send his policemen to guard the blood donor centres, Sharkey contacts him and informs him that he picked his pocket back at Mama's and stole the strange metal creature inside. The Doctor warns him that it's dangerous, but Sharkey dismisses the warning and offers to sell it back to him. The Doctor and Mullen rush to Mama's, but are delayed by the German bombings and by an unexplained explosion far more powerful than could be caused by any German bomb of this period. Ace gets back to Mama's before they do, pursued by Cybermats -- whose attention is diverted to the dormant Cybermat in Sharkey's pocket.

Ace manages to escape as the Cybermats tear apart Sharkey and then fall upon Mama's clientele. She seeks shelter back at Limb's, where he leaves her to rest while searching for a working telephone with which to contact the Doctor. While listening to a Walkman which she smuggled out of the TARDIS without the Doctor's knowledge, she hears movement from upstairs, and when she investigates she accidentally releases the Lurker, a Cyber-Leader which Limb had locked in his bedroom. She is saved by a stranger who electrocutes the Lurker with a makeshift prod made from a damaged lamp -- but the new arrival is a Nazi officer, Captain Hartmann, who while studying Ace's Walkman records himself telling her that Limb has in fact been supplying the Nazis with intelligence for years... Ace attacks him, but he knocks her out and takes her from the house with him; during the struggle, the tape is ejected from the Walkman.

The Doctor, having failed to prevent the massacre at Mama's, arrives at Limb's house to find Limb apparently in a state of distress over Ace's disappearance. Limb explains that he followed through on the Doctor's earlier comments and captured the Lurker near the central blood collection unit. The Doctor activates the dead Cyber-Leader's memory core, and finds that it is a time-traveller which was sent back to prepare the way for an army of sleepers for invasion. This particular Cyberman was damaged by a German bomb, however; the two which arrived a few days ago are the rescue mission. The Doctor returns to McBride's to await results from Mullen's investigation, but Mullen has been forced to hand over the investigation to Lazonby, whose first act is to arrest the Doctor. Lazonby believes that Peddler was developing a new type of body armour for the British soldier, and that the "Cybermen" who attacked the factory were Nazi agents in body armour. This means that someone must have supplied the Nazis with the results of Peddler's experiments, and Lazonby, believing that the Doctor and McBride are the culprits, intends to have them shot as soon as the Doctor confesses how the Cyber-Leader's head works.

Limb contacts Wall and offers his assistance, and with his help Wall is soon back at work within Peddler's factory using volunteers from Lazonby's men to complete his experiments. Lazonby thus no longer needs the Doctor and McBride alive. Mullen, certain that Lazonby is wrong about the Doctor, helps them to escape from the military prison -- and when the Doctor learns what Limb's been up to and Mullen reveals the extent of Limb's connexion to the criminal underground, the Doctor realizes that he's been played for a fool. As night falls and the Blitz begins again, McBride and Mullen take a squad of policeman to Peddler's factory while the Doctor returns to Limb's house; Limb has long gone, but the Doctor finds the tape abandoned by Ace. He returns to the factory, where Lazonby is about to shoot them all until the Doctor plays the tape for him and reveals the truth. McBride manages to break open Wall's secret laboratory, where Lazonby sees his volunteers being transformed into Cybermen -- along with old men, women and children kidnapped from the shelters in the Underground. Lazonby opens fire on the Cybermen, who instantly respond to the attack. He is killed holding them off while the others escape, and Wall is accidentally shot by a Cyberman aiming at McBride. The Doctor, McBride and Mullen open every window and turn on every light they can find, and flee moments before the German bombers destroy the brilliantly-lit target.

The Doctor learns that the massive explosion he and Mullen experienced on their way to Mama's was just one of many in recent months -- and that the path of the explosions follows the path of the Limehouse Lurker murders. Telling McBride and Mullen to keep their story to themselves, he sets off to investigate and soon locates the culprit -- a mobile Cyber-command unit sent to Earth at the same time as the damaged Cyber-Leader, which had been pursuing it for weeks trying to re-establish their connection, triggering defensive explosions whenever somebody got too close to it. The Doctor is able to reprogramme it and takes it to Le Mur Engineering on the island of Jersey -- one of a number of companies which Mullen had told him were conducting work along similar lines as Peddler's company, but the only one with a name that translates from French to English as "Wall".

Ace is being held prisoner by German forces, who have been investigating the work at Peddler's factory ever since they landed and occupied Jersey. Limb also arrives on Jersey, having deduced everything from the few clues he gathered in London. A sleeper army of Cybermen is lying dormant in the heart of Le Mur Engineering, awaiting activation. Peddler and Wall were originally partners, but as they tried to learn the Cybermen's secrets Peddler became appalled by their nature and attempted to break off his ties to Wall. Now Limb is trying to supply the secrets of Cyber technology to both the Nazis and the British in order to provoke an arms race which will increase the rate of human technological progress. Limb is obsessed with knowledge, information and communication, and his greatest fear is that he will die without knowing what the future holds. Now that Peddler's factory has been destroyed, the balance has tilted towards the Nazis; but when the Doctor arrives, Limb -- having realized that the Doctor is a time traveller -- offers to make a deal with him. If the Doctor will take him to see the future, Limb will convince his contacts in Berlin to shut down this factory. And Limb has Ace as a pawn to force the Doctor to behave.

Hartmann, believing that the Cybermen are the legendary supermen and will naturally form an alliance with the superior Nazis, tires of Limb's games and forces the Doctor at gunpoint to activate the sleeping Cyber-army. The Doctor does so using the Cyber-command unit... which he had reprogrammed before arriving on Jersey. The waking army obeys his every command, and he orders them to destroy their own hibernation equipment and drive out the Nazis while he programmes the command unit to explode, destroying the factory. But Hartmann, believing that he must demonstrate the fighting spirit of the Nazi officers, leads a more fierce assault than the Doctor had expected, and manages to shoot and damage the command unit, breaking its control over the Cybermen. The Cybermen default to their original programming and begin to kill every human in the area.

Limb tries to flee using the unit which the Doctor had earlier identified as the Cybermen's time machine, but it's malfunctioning, and his attempt to activate it opens a time rift which begins to scatter Limb's consciousness across all time and space. Time slows down around Le Mur Engineering, which gives the Doctor enough time to carry Ace back to the TARDIS and flee before the damaged Cyber-command unit explodes and destroys the entire factory and the Cyber-army. Satisfied that their work is done, the Doctor and Ace depart, unaware that back in London, Mullen and McBride have just discovered the body of the caretaker back in the pumping station -- and something worse. Waiting in the sewers which Wall and his associates were pumping out is another dormant army of Cybermen...