The Doctor is brooding over his inability to connect with his companions on a human level when he and Ace are unexpectedly attacked by a golem, a clay figure animated by a captive soul. Ace destroys the golem with her nitro-nine, but the Doctor feels that the creature was somehow familiar. He and Ace retreat to the TARDIS, only to find that a malevolent force has passed into its structure through the telepathic circuits. The force urges the Doctor to fight it, and the Doctor removes the telepathic circuits and decides to leave Ace with his first incarnation in safety while he goes into battle. But when he arrives at Foreman's junkyard in November 1966, he finds no sign of his earlier incarnation, and he and Ace are attacked by zombies which draw the life out of them at a touch. They manage to escape into the streets, where American soldiers shoot at them for breaking curfew, but find shelter with a sympathetic local couple -- Ian and Barbara, who have never met the Doctor or Susan before.

Barbara, sensing that the Doctor may be able to help, tells him about the evils of the past century. Following the Ripper murders, the citizens of London rose up against the authorities who were unable to protect them, and a period of civil unrest followed. Then, during World War One, rumours of atrocities drifted back from the front lines -- and when the shell-shocked veterans returned, something evil returned with them. Ever since, London has been under siege from the walking dead, social order has broken down, and gangs of youths who worship Jack as the new Messiah roam the streets. The Americans took control after the war with Hitler and put London under quarantine, but all they've done is contain the problem; and earlier that day, President Kennedy was recently torn apart by zombies while making what was intended to be a morale-boosting appearance. The Doctor determines the point at which history diverged and sets off with Ace to investigate. Soon afterwards, the spectre which now haunts London sends its acolytes in search of its enemy, and finding only Ian and Barbara, the zombies kill them.

The TARDIS materializes in Whitechapel in 1888, but the moment the Doctor steps out of the ship he attacks Ace, violently and sadistically, telling her that she will become the Ripper's next victim. He manages to resist at the last minute and urges Ace to flee, and as she does so, he downloads his mental pattern into the telepathic circuit and flings it into the Thames. A local simpleton named Jed takes the mysterious glowing cylinder for himself but reports the rest of what he has witnessed to his master, the twisted circus ringmaster Malacroix. Malacroix fetches the TARDIS, planning to add it to his collection of curios.

Ace, lost and alone, stumbles into a knacker's yard and blurts out that she has just been attacked by the Ripper; but when she comes to her senses she flees, unwilling to turn the Doctor in to the police. She finds shelter for the night and tells the owner of the flophouse, Barney, that she will pay him later. She is unable to find any help, and when the police track her down and demand that she make a statement, she has no choice but to give them the Doctor's description. She returns to Barney's, where he realizes that she has no money and attempts to extract payment by other means. As she fights him off she feels the power of the Cheetah world rising in her, and nearly transforms into a Cheetah person before regaining control of herself and fleeing. Jed, who has been following her, reports it all to Malacroix, who determines to add the "cheetah girl" to his freak show.

Ace seeks employment at an agency, but due to her limited experience all she finds is a position as maidservant to an elderly madwoman, Jane Treddle. Desperate, Ace tries to rob Treddle's house, but Treddle catches her and tries to stab her to death with a hatpin. Ace fights her off and flees the house, leaving Treddle bleeding to death in the foyer. Haunted by ghost-like whispers, Ace stumbles into an abandoned warehouse where she seems to be attacked by a Cheetah-version of herself. Denying the reality of her attacker, Ace blows up the warehouse with the last of her nitro-nine, but as she flees she is captured by Malacroix's thugs. He takes her back to his circus and locks her in a cage, refusing to feed her until she changes into a cheetah girl for him. Meanwhile, Jed begins to experience oddly alluring memories while staring into the cylinder he took from the Thames.

The Doctor now has no memory or identity and knows himself only as Johnny. He plays card tricks in a nearby pub while experiencing visions of darkness and evil, and feeling urges to kill the creatures he sees masquerading as women. When Ace's description of her attacker reaches the pub and somebody notices blood on Johnny's coat, an angry mob nearly kills him, but he is rescued by an elderly Jewish man. Joseph Liebermann -- who claims to be over 1900 years old and may be the Wandering Jew of legend -- takes Johnny back to his home, where Johnny immediately sets to work repairing the many clocks Liebermann has collected. Liebermann suspects that his new visitor is in fact the Ripper, but has lived too long to pass judgement on his fellow men; instead, he takes Johnny to the funeral of the Ripper's most recent victim, hoping to stir some hidden memories. Malacroix sees them but takes no notice, even when Johnny gets overly agitated and Liebermann is forced to take him back home. Later, the priest who conducted the ceremony, Reverend Jefford, sees a ghostly spectre haunting his cemetery, but when he confronts it, its evil overpowers him...

Ace finds a friend in Peter Ackroyd, the master of the freaks, who fears Malacroix's obsession and ruthlessness. Malacroix is, amongst other things, the leader of a criminal gang, and once he stirred up anti-Semitic riots in an attempt to dispose of a rival Jewish gang. Ackroyd, young and foolish, set fire to a synagogue in order to convince Malacroix to let him join his gang, but the mob then sealed it up with people still inside. Malacroix threatened to go to the police unless Ackroyd served him faithfully for the rest of his life. Malacroix bribes a policeman who had come to arrest Ace for Jane Treddle's murder to ensure that she remains part of his collection. Ace happens to notice Jed looking into a glowing bag, and guesses that he has the TARDIS telepathic circuit. The midget Tiny Ron agrees to steal it for her, but he fails, and it falls into Malacroix's hands. Malacroix then throws Tiny Ron into the ring with a lion and forces Ace to watch, until she has no choice but to transform into a Cheetah person and attack the lion in order to save Tiny Ron's life.

Malacroix, satisfied, turns his attention to the crystal, which grants him a vision of the Ripper murders. When Jed finally tells him where he found the crystal, Malacroix, who wants to add the Ripper to his collection, realizes that he saw the man Jed describes with Liebermann. He sends out all of his contacts, including ostensibly respectable citizens whom he is blackmailing, to find Liebermann, and spreads rumours that the Ripper is being hidden by a Jew in order to provoke further anti-Semitic riots and drive his target out of hiding. Ackroyd decides that Malacroix has gone too far and releases Ace, who asks her to steal back the telepathic circuit for her. He agrees to do so, and she retreats to a local church to find sanctuary -- and falls into the hands of Reverend Jefford and the Doctor's enemy...

The enemy sends more golems into the streets of London to hunt the Doctor, and they converge on Liebermann's home. Liebermann manages to hold them off with a cabbalistic ritual, while "Johnny" flees into the streets, convinced that he is responsible for the Ripper murders even though he has no memory of having committed them. Malacroix falls into a stupor after using the telepathic circuit to witness more visions of the murders, and Ackroyd gets it away from him only to experience his own vision of a future London under the thrall of Jack's spectre. Ackroyd frees the rest of the performers and allows the telepathic circuit to lead him to its true owner. He finds the Doctor wandering in the streets of Whitechapel, and as soon as the Doctor touches the telepathic circuit, his memories are restored to him.

Realizing that he has no choice but to confront his enemy, the Doctor goes to Jefford's church and finds his own tomb waiting in the cemetery. The tomb is larger on the inside than the outside, and is populated by hooded wraiths, lost souls which the enemy has been using to animate his golems. The Doctor must finally acknowledge the identity of his enemy; the Valeyard at his trial, his own dark nature incarnate. His enemy is himself. After taking over the body of the Keeper of the Matrix, the Ripper gained access to the legendary Dark Matrix, the repository of all dead Time Lords' most evil, twisted and perverted thoughts. He brought it to Earth in this tomb, a twisted version of the Doctor's own TARDIS, and fed it on the psychic potential of the Whitechapel murders while hunting down each of the Doctor's incarnations and nurturing the seeds of evil within each one. The wraiths are the Doctor's other incarnations; only the Seventh survived, by using the telepathic circuit to lock off his conscious mind from the assault. The Doctor realizes that the Ripper is losing control of the Dark Matrix, which will soon spread out to control all of London as Jack's spectre, creating the dismal future he encountered earlier.

Malacroix pursues Ackroyd and the circus freaks to the church, where the battle between the freaks and Malcroix's thugs ends when the strongman, de Vries, finally turns on Malacroix and joins the other side. De Vries and Ackroyd enter the tomb and rescue Ace, and de Vries gives his life to hold off the attacking wraiths while they escape. Meanwhile, the Doctor heads into the depths of the haunted TARDIS to confront the Dark Matrix, which is functioning on a purely animal, primal level. He manages to convince it that the Ripper is keeping it trapped, and it attempts to escape from the TARDIS, causing a dimensional breach. As the TARDIS begins to collapse, the Doctor and the Ripper escape and battle inside the church. The Dark Matrix is trapped inside the TARDIS as it implodes, and at the moment of its death the Ripper is struck by lightning and killed. The Doctor and Ace return to their own TARDIS and depart, leaving Ackroyd and Tiny Ron to exact their own revenge on Malacroix. With the destruction of the Ripper and the Dark Matrix, history is restored to normal.