Every winter a reluctant shantytown springs up around the inn of Janua Foris, as the trappers are forced to rely on each other to help prepare the hides they have gathered for the guild sleds. The sleds will kill any who fail to meet their quota, and murder will be committed for little reason other than to pass the time. This is no place for weakness, and yet it is to this inn that an elderly storyteller has come to tell the tale of the dark god Valdemar and the eccentric traveller who opposed him. The young trapper Ponch is spellbound by the story, knowing somehow that it is the most important thing he will ever hear...

The quest for the Key to Time is interrupted when the Tracer is damaged by a chronometric pulse caused by a breach of the higher dimensions. K9 attempts to run a diagnostic on the Tracer, but must shut down for repair when the forces acting upon it begin to alter his very being. The TARDIS materializes on Ashkellia, in tunnels reputed to be the tomb of the dark god Valdemar, and the Doctor and Romana emerge, intending to find the source of the disturbance, put an end to it and resume their quest. Instead they find a bathyscape which has been lowered into the tomb on a chain, and encounter the terrified novelist Miranda Pelham, whose associate and lover Erik has opened the tomb, transformed into a monstrous mutant and killed their pilot, Prahda. Erik pursues them back to the bathyscape, and the Doctor has no choice but to pull the lever which will haul them back out of the tunnels. The monster clings to the outside of the bathyscape and is instantly killed when it emerges back into the sulphuric acid atmosphere of Ashkellia, but the bathyscape continues upwards, back to the floating golden palace of the Old Ones.

Miranda is taken for questioning by the brutal Kampp, while the Doctor and Romana are brought before a quite literal party of adolescents, the sons and daughters of the former galactic Elite. Romana remains with them while the Doctor speaks with the expedition's leader, theurgist Paul Neville, who is forced to rely on the adolescents' parents for funding. He soon determines that the Doctor and Romana are not agents of the New Protectorate or of its Chief Prosecutor, Robert Hopkins, and thus asks the Doctor to help him restore full power to the palace. He claims that all he wants is to take the knowledge and science of the Old Ones back to Earth, and bargain for the restoration of his lost lands and titles; however, the Doctor suspects that what Neville really wants is to reopen the tomb of Valdemar. If the Doctor agrees to help him Neville will allow him to return to his ship and continue on the quest for the Key, but in doing so the Doctor may give a madman the means to release an ancient evil upon the Universe. If he refuses, he will be unable to complete his quest for the Key -- and Neville has Romana as a bargaining chip...

Romana is appalled by the decadence of Neville's patrons, and saves a young, acne-ridden boy who is being tormented by his narcisisstic fellows. Unfortunately, Huvan is in the throes of puberty and instantly falls in love with her, and reveals that he is in fact 34 years old. She manages to get away from him as he tries to read his angst-ridden poetry to her, and finds her guest quarters, which are exactly the same as her rooms in the TARDIS. When she next meets Neville he concedes that he is responsible for Huvan's condition, but claims that he altered Huvan's genetic structure to save him from a degenerative disease. He then takes her to see the Doctor in the palace's telepathic library, and before she realizes that Neville is monitoring their conversation she mentions that she's worked out what the palace is -- the control centre of a vast particle accelerator built on the planet. The Doctor believes that the accelerator's function is to breach the higher dimensions which underlie all of reality, and when Romana tells him about her quarters he realizes that the palace is telepathic. Perhaps telepathy is simply a perception of the higher dimensions, and when Erik tried to open the "tomb" his mind and body changed to let him perceive the forces he had unleashed, driving him mad. Perhaps "Valdemar" is nothing more than the spreading breach caused when the Old Ones first built this accelerator and inadvertently began to change the very nature of reality. But whoever or whatever it is, how was he, or it, stopped?

The Doctor, desperate to get back to the TARDIS, decides to reactivate the palace as Neville wishes him to, believing that without a powerful psychic to focus its power Neville will be unable to tap its full potential. When he does so, however, the delighted Neville throws him into a cell with Pelham, and the Doctor learns what a terrible mistake he has made by underestimating Neville's determination and madness. Neville's lifetime desire to transcend mortal existence eventually led him to Pelham's best-selling horror novels about Valdemar, which had been based on half-remembered and invented scraps of information, and inspired by a cult massacre on the planet Proxima II which the young Miranda missed by barely a day. Pelham had no choice but to join Neville on his quest to find the real Valdemar when the New Protectorate overthrew the Elite and Robert Hopkins started hunting them both, and now, thanks to her, Neville is close to achieving his goal. Huvan was a natural psychic even before Neville altered him to keep him in a permanent state of adolescence, and now his hormones are raging and his psychic potential is off the scale -- just what Neville needs to make the perfect host for Valdemar...

Romana is unable to find the Doctor and is forced to enlist the help of Tenniel Stanislaus, one of the spoiled youths who have accompanied Neville on his quest in the belief that he intends to restore their families to power. Huvan, meanwhile, discovers that his powers have increased exponentially with the full activation of the palace, and, assuming that this is due to his love of Romana, he telepathically guides her towards the Doctor and uses his new powers to frighten a guard to death before he can kill Stanislaus and take Romana back to Neville. Romana and Stanislaus release the Doctor and Pelham, and when they finds the guard's body the Doctor realizes he must remain in the palace to correct his mistake. He is, however, too late; Neville has brought Huvan and the youths together for the final ceremony in which Huvan will become the vessel for Valdemar. Huvan seems unable to take the final step, until Neville informs him that Romana has run off with Stanislaus, at which point the furious Huvan snaps and opens himself to the powers flowing through him. When Romana and Stanislaus arrive, Huvan blows Stanislaus's body to bits with a thought, and then collapses, burnt out from the strain of exercising his new powers.

The Doctor overpowers Neville, who flees to fetch his guards, and the Doctor orders the reluctant Romana to take care of Huvan while he and Pelham head for the library. The Doctor informs Pelham that there is no Valdemar and never was; the powers flooding through Huvan are his own, amplified by the palace and the particle accelerator on the planet. When the Old Ones first opened the breach, they, like Erik, were warped and driven mad by their new perceptions of reality -- but somehow they managed to seal the breach before they disappeared from the Universe. But now that the Doctor has foolishly reactivated the palace, Neville can use Huvan to operate the particle accelerator and reopen the breach, effectively destroying all concept of space and time. In the library, the Doctor learns that the Old Ones created a psychic vaccine to block their perception of the higher dimensions, and he finds some and administers it to himself and Pelham -- but before he can analyse the remaining vial Neville and his guards capture them and destroy it. The Elite youths, already shocked by the gruesome death of Stanislaus, find themselves transforming into animals as the vengeful Huvan and the higher dimensions go to work on them, and Neville has his guards shoot them. He then takes the Doctor and Pelham to the airlock and expels them into the acid skies of Ashkellia. But at the last moment, Pelham activates a bangle on her wrist and transports herself and the Doctor to the spacecraft of Robert Hopkins, who has been waiting in orbit around Ashkellia for her...

Hopkins is infuriated when he realizes Pelham has failed to bring Neville to him, and he has both her and the Doctor locked up to await torture and execution. Pelham admits that Hopkins captured her long ago and released her so she would lead him to Neville; she was unwilling to activate the bangle before now for fear that Hopkins would dispose of her once she was of no further use. Hopkins is a staunch believer in the puritan existentialism of the New Protectorate, loathes those who dare to believe in anything greater than themselves, and has made it his life's mission to destroy Neville. He doesn't believe the Doctor's warnings that Neville is unleashing forces which could destroy the entire Universe, but is forced to concede that the theurgist may very well have set traps for him and his people in the corridors of the golden palace, and thus allows the Doctor and Pelham to live, to act as guides. His ship descends into the atmosphere of Ashkellia to dock with the palace, and the Doctor and Pelham are guarded by the genetically augmented sharpshooter Redfearn, who is given orders to kill them the instant they step out of line.

Exposure to the higher dimensions is continuing to transform the inhabitants of the palace just as it did to Erik in the tomb, and Romana nearly succumbs herself when the transforming Kampp attacks her. Neville comes to collect Huvan and shoots Kampp, killing him and pulling Romana back from the brink of change, but her momentary perception of the higher dimensions -- what the Time Lords call the Kinetic Dance -- has given her a greater understanding of what is happening. She tries to convince Neville that there is no dark god awaiting release, simply the singularity from which all sentient life sprang -- a perfect unity which no individual is capable of understanding. Neville refuses to accept this, and tells her that the Doctor is dead -- and the stunned Romana realizes that the Universe is much larger and less friendly than she had believed possible, beyond her narrow perceptions. Convinced that he is on the verge of becoming something more than human, Neville takes Huvan and Romana to the tomb via bathyscape -- unaware that Huvan's powers have made him more confident and assured, and that he no longer controls the adolescent. But Romana knows that beneath Huvan's apparent maturity he is still a confused adolescent who can't understand why, now that he has the power to do anything he wishes, Romana still pities him.

Hopkins and his soldiers break into the palace, only to find it full of bodies. The Doctor insists that even the New Protectorate soldiers are being affected by the changes occurring here, but Hopkins concludes that the Doctor is trying to frighten and mislead them, and orders Redfearn to kill him. The Doctor telepathically shuts off the lights and flees with Pelham to the control room, having deduced rather too late that the Old Ones must have installed a transmat system in order to reach the tomb safely. Redfearn tracks them down in the control room, but the Doctor challenges him to a quick draw, trips him up with his scarf as he fires, and activates the transmat. Pelham, however, has been shot in the arm, and as she starts to pass out from shock, the Doctor tries to help her focus by explaining that all life was once a part of a single unity; but the Kinetic Dance fragmented, and the pieces forgot their connection to the whole. The Old Ones sought to regain that connection but were subsumed to it; and if Neville opens the breach again the Universe will cease to exist as they know it. Meanwhile, Hopkins and Redfearn are attacked by the hideous mutants that now inhabit the palace, and as the New Protectorate soldiers fight to the last man, Hopkins and Redfearn try to flee via the transmat. Huvan, however, detects Hopkins' presence, and the furious Neville orders him to destroy his nemesis. Seeking to impress Romana with his power, Huvan destroys the palace...

Unfortunately, it is at this point that the storyteller finally dies, her story incomplete. Her last request is that her body be left alone in the inn, and Ponch obeys, although he knows that the scavengers will take all they can from it -- and indeed, when he later returns, there is no sign that she was ever there. But as the months go by the story eats away at him until he finally commits the gravest crime ever committed in Janua Foris -- he deserts the community and sets off to find out where the guild sleds come from, and what is done with the furs the trappers collect each season. On the way, he will finish the story himself.

The Doctor and Pelham reach the tomb just in time to confront Neville, Huvan and Romana. Huvan reveals that he is no longer under Neville's control -- but to the Doctor's horror, he still intends to open the gateway and achieve ultimate power, and to take Romana as his bride. As he starts to open the tomb, Hopkins and Redfearn arrive via the transmat, and Redfearn shoots Huvan while Hopkins arrests Neville. Infuriated that his nemesis has robbed him of his chance at glory, Neville attacks Hopkins, and as they fight they sink into the opening gateway and are lost to the higher dimensions. Huvan, unharmed, incinerates Redfearn and passes through the gateway, taking Romana with him. Pelham, however, wonders why he had to enter the tomb rather than simply wait for the higher dimensions to come to him -- and the Doctor realizes that the Old Ones must have put a failsafe on the other side of the gateway. He and Pelham pass through to find themselves in a replica of the palace -- but one in which the control centre is occupied by a vast, dreaming creature. The Doctor realizes that he was wrong all along; there really is a Valdemar...

Valdemar is the last of the Old Ones, their race's equivalent to Huvan, and Huvan intends to take his place and become a god. But the Doctor challenges him to release Romana first; if she does not love him of her own free will, it proves he is nothing more than a spoiled adolescent who failed to get his own way. Partly due to Huvan's will weakening, partly due to a nudge from Valdemar himself, Romana breaks free and tells Huvan precisely what she thinks of him for doing this to her. The Doctor then informs the stunned Huvan that the Old Ones never had the chance to seal the breach and entomb Valdemar; Valdemar did it himself, having realized that ultimate power is ultimately unfulfilling. Huvan may now be able to reshape reality and control the Universe, but he will never have what he really wants -- to be accepted for who he is. The only choices open to him are to destroy all existence in a fit of rage, to lock himself away for all eternity as has Valdemar, or to use his powers to forget his past and live the life of an ordinary man until he has gained true maturity. Huvan chooses the third option. Valdemar then contacts Pelham telepathically and requests that she stay with him, and she accepts; she has nothing to return to, and here she will be able to learn more about the Universe of which Valdemar only dreams. The Doctor and Romana take the shell that was Huvan back to the TARDIS and depart, and the breach closes itself up, leaving no trace -- apart from Hopkins and Neville, who have melded together into a single hideous creature which is roaming the tunnels of the tomb, endlessly tearing at itself, never at peace...

This is not the most exciting ending that Ponch can envision, but it seems the most appropriate, and he realizes why when he reaches the citadel of the guild sleds and finds it long abandoned. The sleds are all automated, and the furs they collect are dumped in a storage facility to rot. The life of the trappers is harsh, brutal, and utterly pointless... and exactly the sort of environment where one must learn to mature, or die. And now Ponch understands why he knows the story of Valdemar is real; it's because he was there at the time. He waits out the season and returns to the remains of the settlement at the Janua Foris, to find the storyteller waiting for him in her new, younger body. Ponch is no longer the arrogant youth he once was, and she welcomes him into her dimensionally transcendental travelling machine and sets off to explore the Universe with her new companion...