The Thals are battling the Daleks on the planet Terakis, and the primitive natives, caught in the midst of a battle between two species more advanced than they can comprehend, are taking the worst of it. When the Daleks commit their forces to a full-scale assault, the Thals pull out -- and destroy the entire planet. The Thal Ayaka is horrified, especially when she learns that there was never anything strategically significant about Terakis. The Thals lured the Daleks there simply to dispose of them, and they have exterminated an entire innocent race in the crossfire.

The TARDIS is scooped up in the ramjets of an interstellar garbage scow, the Quetzel, while the Doctor is repairing his ship’s lock. He and Sam emerge in the cargo hold to find that the Quetzel, which has been patrolling the edge of Dalek space, has picked up a great deal of debris from Dalek battle cruisers, including a mysterious sealed pod. The engineer Chayn is assigned to open it, but her fellow crewman Harmon has already contacted the Thals and arranged to sell the pod to them. He sabotages her equipment to prevent her from opening the pod before the Thals arrive, but he wasn’t expecting the Doctor to show up; intrigued by the unopened pod, the Doctor helps Chayn to repair the damage to her equipment. Before they can open the pod, however, Harmon holds them off until the Thals arrive. Two Thal ships arrive and dock with the Quetzel, and the Thal commander, Delani, demands to be taken to the pod, shooting the Quetzel’s captain without hesitation when he refuses.

The Doctor identifies himself, and is horrified to learn that the Thals have become ruthless warriors because he taught them to fight; Sam, however, insists that he’s not responsible for the way the Thals have corrupted his teachings. Delani, meanwhile, opens the pod to reveal that it contains Davros, who entered suspended animation after his encounter with the Seventh Doctor in 1963. At first the Doctor assumes that Delani is here to kill Davros or put him on trial, and he is stunned when Delani reveals that he intends Davros to genetically manipulate the Thals and turn them into better warriors, better able to destroy the Daleks forever. Delani, unable to understand why the Doctor of legend is treating him with such contempt, orders Ayaka to lock up the Doctor and his friends. She does so, but due to the Doctor’s attempt to reawaken her buried humanity, she neglects to search them, and Chayn is thus able to use her tools to break out of their cabin.

Delani fits Davros with an explosive collar to ensure his co-operation, but Davros easily disables it with an electronic pulse. The Doctor arrives just in time to stop Davros from killing his guard, and Delani reinstalls the collar with a circuit which will kill Davros if his guard dies. Nevertheless, realizing that discipline over his troops is slipping, Delani orders Ayaka to shoot the Doctor for disobedience. Realizing that Delani has gone too far, Ayaka shoots him instead, but then surrenders herself to her fellow Thals for punishment rather than helping the Doctor to stop them from rescuing Davros. As the Thals prepare to move Davros onto their ship, however, the Quetzel’s communications officer detects a distress signal being transmitted from his pod -- and before the Thals can react, six Dalek kill-cruisers arrive and demand their surrender.

The Thals release the Quetzel’s crew, except for the Doctor, Sam and Chayn, who must still answer for their crimes against the Thals. They then prepare for battle, but although one of their ships is destroyed, the Daleks uncharacteristically capture the other ship without exterminating the captive Thals. The Doctor becomes concerned when the Daleks allow him to live as well; their standing orders are to exterminate him upon sight, and if they are letting him live they must have something even worse planned. He is startled to learn that their ship is being taken back to Skaro, which he believed to have been destroyed; has he destroyed the wrong planet? Meanwhile, one of the Daleks contacts Davros to inform him that there are elements back on Skaro which still accept his claim to be the rightful ruler of their race. On his command, his supporters will rise and overthrow the usurping Dalek Prime...

Upon arriving on Skaro, Chayn and the Thals are locked up while the Doctor and Sam are taken for an audience with the Dalek Prime. The Dalek Prime explains that following their invasion of Earth in 2154, the Daleks found documented evidence from the 1960s that the Doctor and Davros had between themselves destroyed Skaro. When their invasion was defeated, the Daleks attempted to change history via Styles’ peace conference, but when this attempt failed they came to the conclusion that it was impossible to change history. To prevent Skaro’s destruction, therefore, they needed to make it appear as if it had been destroyed, and to that end they terraformed the planet Antalin to resemble Skaro and moved Davros there. They then manufactured a race of robots called Movellans and faked a war with them to give themselves a plausible reason for unearthing him. Ever since the Doctor unwittingly stumbled across the wrong planet using the Randomiser, the Daleks have been manipulating him and Davros into fulfilling history in such a way that Skaro would survive whilst its destruction was recorded.

Davros has now proven his unreliability, and the Dalek Prime has brought him to Skaro for a public trial to draw out those elements of Dalek sociey which still follow Davros. Once Davros and these traitors have been eliminated the Daleks can rebuilt their empire. The Doctor is being allowed to live as a backup plan, and the Thals are being kept alive as hostages to ensure his co-operation; should the Dalek Prime fail, the Doctor must destroy Davros. The trial begins, and Davros is allowed to speak his case. Once again he insists that as the Daleks’ creator he knows them better than anyone, and that only he can lead them to their true destiny as masters of the galaxy; he refuses to believe that this is really Skaro, certain that the Dalek Prime has rebuilt a new world and renamed it Skaro to cover up the destruction of their homeworld. The Dalek Prime insists that under Davros’ command, the Daleks have been defeated time and again, and that it is Davros’ bungling that led to the destruction of his entire army on the planet he believed to be Skaro. Davros is sentenced to death by matter dispersal, but before sentence can be carried out, the Daleks loyal to him make their move, and civil war breaks out.

In the midst of the confusion, the Doctor and Sam escape and help Chayn and the Thals to break free as well. Both battling Dalek factions are attempting to seize control of the spaceport, but the Thals manage to fight their way through and escape. They get past the Dalek defense satellites by broadcasting stolen Dalek command codes which the Doctor suspects should no longer be effective. Despite the heavy casualties they have suffered he believes their escape was too easy, and as he tries to work out what’s going on the Thals are attacked by Spider Daleks which apparently boarded the ship to protect something. As they fight off the Spider Daleks, the pilot Cathbad notices that the ship’s reactions are more sluggish than normal, and the Doctor scans the ship using the TARDIS and discovers that its mass has increased by five percent. The Daleks have planted a dimensionally transcendental factory unit on board and allowed the Thals to escape; without realizing it, the Thals were about to carry an army of Daleks into the heart of Thal territory. The Doctor uses the TARDIS to expel the factory ship into the Vortex, assuring the worried Sam that although it is bound to re-emerge, he’s already dealt with that problem elsewhere in Time.