Europe, 1919: the First World War is over, but children have been disappearing after receiving gifts of anachronistic teddy bears. Roz and Chris investigate the appearance of a young French girl named Gabrielle from a family wedding in the village of Septagny, but the family reacts to the dark-skinned female Roz with suspicion; only Gabrielle’s distraught mother Amalie appreciates her interest and help. Roz and Chris report to the Doctor, unaware that they are being observed by a young man who subsequently vanishes in a flash of light, off to make his own report. Meanwhile, in England, Benny attends a seance in which the clairvoyant Madame Segovie has promised to place the grieving Mrs Charlotte Sutton in touch with the spirit of her son Charles, who failed to return from the war. Mrs Sutton’s young daughter Manda refuses to attend, as she has lost her faith following the deaths of her father and brother. Madame Segovie proves to be a charlatan, but nevertheless during the seance she has a vision of a battlefield, and the coffee table explodes as though a bomb has gone off on it. Benny explains to the shocked women that a trench war is being fought on a distant planet, and that psychic resonance with the war in Europe has linked the two worlds, making it possible for people from the other world to travel to Earth. Having learned all she can from the Suttons, Benny departs -- but soon afterwards, Manda’s sister gives her a teddy bear as a present, and by the next morning Manda too has vanished.

Unaware of Manda’s disappearance, Benny returns to her job at a nearby toy factory which has been manufacturing the teddy bears which the Doctor suspects are linked to the children’s disappearances. While working on the assembly line, she sees a factory executive arrive for an inspection -- and recognises her from Mrs Sutton’s family photos as the missing Charles. She pretends to faint in order to get to the office and learn more, but while she tries to make her questions as obscure as possible, Charles becomes suspicious and uses one of the teddy bears -- in fact loci of an mm’x interstitial transport beam -- to send her to the planet Q’ell. There, she is operated upon by one of the bearlike Biune, and once “retrained”, she willingly returns to Earth and helps Sutton to lead the Doctor into a trap. He too is transported to Q’ell for retraining...

Amalie’s family urges her to return home and leave the investigation to the proper authorities, but, believing Roz and Chris to be her only hope, she remains in Septagny and buys Roz and Chris a teddy bear like the one which a strange man gave to Gabrielle before she disappeared. Their investigation, however, has attracted the attention of their enemies. A man named Sergeant Dale, one of Charles Sutton’s former trenchmates, arrives in Septagny, claiming to be from a British special investigaitons unit, and convinces Amalie’s family that Roz and Chris are Bolshevik terrorists. Amalie’s family lies in wait to capture them upon their return, but Amalie tries to warn them off -- and before her family can stop him, Dale shoots her dead for consorting with the enemy. When Amalie’s horrified brother turns a gun on him, Dale vanishes in a blaze of light. Roz and Chris are sent to the police station in Touleville for questioning, but during the night the entire population of Septagne vanishes into thin air. The desperate Inspector Martineau turns to his prisoners for help, and although Roz is technically still Chris’ superior officer, she is puzzled when Martineau speaks only with Chris, acting as though she isn’t even there.

Meanwhile, the war continues on Q’ell. Young Josef Tannenbaum and his partner Ingrid pilot one of the walking steam-tank engines to the front lines, while Gabrielle takes to the skies. Supplies are short, even for the most vital missions of the war, and food rations come from the bodies of enemy soldiers. Sergeant Summerfield leads a squad of Biune and Ogrons to no-man’s land to scavenge parts from damaged tanks, but they are attacked by Josef and Ingrid’s steam-tank. Summerfield manages to bring it down, and while Josef flees to safety, Ingrid is caught and brutally torn apart by the Ogrons. The horrified Josef vows to avenge her by killing all of the enemy. Summerfield is also horrified by the girl’s terrible death, but is unsure why she’s reacting this way to the death of an enemy. She can’t understand the strange thoughts running through her head; what is “peace” and why does she desire it so strongly? When Gabrielle’s plane is shot down nearby, Summerfield resists the impulse to shoot her dead, and loses consciousness as a result. Uncertain why she is doing so, Gabrielle carries her enemy to the trenches to recover.

The owner of a toy shop in Touleville reports to Martineau that his entire stock of teddy bears has been stolen, but Roz and Chris realise that he’s hiding something, and conclude that he’s reported the crime in order to cover up one of his own. As soon as they’ve gone, the nervous Parmentier reports the incident to Universal Toys’ Parisian office, and is told that he will have to kill the investigators for the sake of the world’s children. Roz, Chris and Martineau decide to visit Paris and question the teddy bears’ manufacturers, but Roz spots Parmentier following them on the train and gives chase -- only to be caught by angry officials and nearly thrown off the train. She finally realises that the odd looks and contemptuous attitudes she’s been receiving are due to her skin colour. Chris accidentally shoots Parmentier while struggling for his gun, and, believing that he’s dying, Parmentier passes out pledging eternal loyalty to the Bolshevik cause. Roz and Chris convince Martineau to let them question Parmentier alone, and manage to convince him that his operation has been compromised by people who don’t share his aims. He admits that his associates have distributed thousands of teddy bears to children, their supposed intention being to kidnap them and educate them in the ways of the workers’ revolution -- and the operation is to go into effect tomorrow at 6 a.m.

Benny awakens, and she and Gabrielle explore the trench to see if it can take them away from the war. However, they find that it curves around the battlefield. The same trench is being used by both sides, and Benny realises that neither side actually has a name, ultimate objective, or any officers. Despite the strong impulses in their minds tring to prevent them from doing so, they climb out of the trench and head north, where they find the ruins of a war-torn city and are captured by the skeletal Q’ell -- who claim to be neutral in the war, and who prepare to process the escaping soldiers for food. Benny sees that the Q’ell have access to technology far more advanced than that used by the soldiers, and learns that they’re using it to protect something called the Recruiter. But they don’t really understand the questions which she’s putting to them, and she realises that the mysterious Recruiter is using them for purposes of its own. The Q’ell don’t listen to her warnings, and sedate her, planning to cut her apart and use her as food. Meanwhile, Josef follows Benny out of the trenches, intending to avenge Ingrid by killing Benny, but he is forced to hide in the wreckage of the city, unable to get past the war machines which the Q’ell are using to guard the Recruiter.

Manda Sutton awakens on Q’ell, and is sent to the Doctor for “retraining” -- but the Doctor has resisted the influence of the Recruiter, and he advises her to pretend to be conditioned while he investigates further. He eventually finds a connection to the Recruiter running beneath the floor of the operating theatre, and sabotages it in order to attract the Recruiter’s attention. Charles Sutton arrives to take him to the Recruiter, and Manda is stunned when her brother doesn’t recognise her. The Recruiter turns out to be an alien war machine which has been programmed to find a battle with the Ceracai; it was damaged in the fighting and crashed on Q’ell in the middle of a local war; and in order to escape, it forced the trench war to continue, on the grounds that warfare acts as a spur to technological progress. The Recruiter has used its teleport systems, directed by the psionic powers of the Q’ell, to summon reinforcements and ensure that the war continues -- and as a result, the war has lasted for 1405 years and has claimed the lives of 2,846,014,032 sentient beings.

The Doctor, furious, informs the Recruiter that it has created armies of toy soldiers who simply fight because they don’t know how do anything else; without a sense of creativity, with no point or purpose to the war, they’ve become killing machines incapable of making the technological advances which the Recruiter requires. The Recruiter accepts his argument and puts an end to the war, transmitting an armistice command to all of the implanted soldiers. It then orders the Doctor to repair it so it can fulfill its original mission and destroy the Ceracai. When he refuses to do so, the Recruiter has Charles shoot Manda, leaving the Doctor with no choice but to repair the Recruiter so it can transport his TARDIS to Q’ell, with the equipment he needs to save Manda’s life. Meanwhile, Josef receives the command to lay down his arms, but with Ingrid’s death still fresh in his mind, he instead kills the confused Q’ell who have stopped guarding the war machines, thus gaining access to one.

While Martineau tries to contact the English authorities, his friend Chevillon flies Roz and Chris across the Channel in a biplane, to reach the Universal Toys factory in England before the Recruitment drive. When they arrive, however, enemy planes materialise out of thin air and open fire on them. Chevillon is killed, and although Chris is able to evade the attackers and land, the delay has prevented them from reaching the factory in time. The activation signal is sent and five million children vanish. Upon landing, Chris and Roz are arrested by English soldiers who have been told only that something is happening at the factory and aren’t sure what Chris and Roz are doing there. They fight their way past the soldiers into the factory, where they find the TARDIS where it was left after the Doctor’s kidnapping; they also find the Recruiter’s transmat unit, and take it into the TARDIS with them. Before Roz can stop him, Chris attempts to pilot the TARDIS back in time to prevent the disaster -- but as the cloister bell begins to sound, he realises that he’s just ordered the TARDIS to materialise in the same spot it is already occupying two hours earlier, which will destroy it.

The Q’ell, unsure what to do now that the war is over, awaken Benny to ask her if the Doctor whom she’d mentioned earlier can help them. She is horrified to learn that they have already processed Gabrielle for food, but nevertheless agrees to accompany them to the Recruiter to find out what’s happening. There, she finds that the Doctor has repaired the Recruiter -- which announces that since the five million children in transit are no longer needed as reinforcements, it intends to send them all back to Earth out of phase, use the energy from the resulting explosion to transmat the Earth into its own sun, and use the transmat to focus the energy of Earth’s destruction throughout the Ceracai domain, destroying all inhabited worlds. The Doctor begs it to reconsider; the war it was programmed to fight ended over a thousand years ago, and the Ceracai are now a peaceful, civilised race. But the Recruiter refuses to disobey its instructions, and the Doctor realises that he will have no choice but to deactivate the transmat link -- resulting in the deaths of all five million children in transit.

At that moment the TARDIS materialises, having rejected the co-ordinates which Chris fed to it and sought out the Doctor instead. Since the transmat unit is aboard, the Doctor realises that he can use it to rescue the children. The Recruiter threatens to kill his friends unless he takes the transmat unit back to Earth so it can complete its mission, but before it can do so, Josef bursts in with his stolen war machine and opens fire. Charles, who has been feeling strangely guilty about shooting Manda, gives his life to save the Doctor, and although the Recruiter manages to stop Josef from destroying it, its reasoning circuits are seriously damaged in the gunplay. The Doctor is thus able to convince it to postpone its plan to destroy the Ceracai until it has decided what it wants to do with the rest of its life. In the meantime, it will use its transmat to bring the Q’ell people who can help them to rebuild a society which has known only mind-numbing war for over a thousand years. The Doctor uses the TARDIS sickbay to heal Manda and transports the survivors of the war back to their home worlds in the TARDIS.