A young woman named Allison comes into the police station claiming to have just escaped after being kidnapped and held by the notorious serial killer, Yin. Shawn and the police are loath to believe her since crackpots have been coming into the station for months making similar claims. Yet Allison proves she telling the truth by showing Shawn the picture of himself as a child standing next to Yang that we saw at the end of last season. With the cops on board, Allison takes everyone back to where she claims she was held only to find the house occupied by an innocent family. Shawn still believes her though, and puts her up in Henry's house while they investigate further. The crime lab determines the picture to be real but the background is fake. This could have been taken anywhere.
Back at Henry's house while Allison is asleep upstairs in Shawn's childhood bedroom, Henry hears a noise outside and goes to investigate. When he finds nothing, he rushes upstairs to check on Allison but finds only a Yin Yang symbol painted onto the bed instead. With Allison gone again and the clock ticking, Shawn turns to Yang for assistance on finding her partner, Yin. She agrees to help, but says she needs out of the psychiatric prison to do it. They all arrive back at Henry's, who has been trying to figure out where the picture was taken and even called Madeleine for help. Yang is thrilled to be in Shawn's old bedroom and tells him not to look for something Yin left behind this time, but to look for something he took. Shawn discovers a particular 45 record of his is gone which leads them all to the Junior High teacher he had a crush on. When this lead turns out to be a dead end, Yang warns his thinking is too remedial. Shawn then realizes the teacher they are looking for is Allison's.
They all race down to the college to discover there has been a substitute in the class for days. They ask the dean for information on the missing Professor, but everything on his CV turns out to be false. The only real thing on there is a P.O. Box, where they find VHS tapes about Yin and Yang that Mary had made for Shawn. In them, Mary warns that Yang might be a victim of Yin's and that Yin is angry about Yang being apprehended and her newfound infamy. Meanwhile, Henry and Madeleine have tracked down their own copy of the picture and Madeleine remembers it to be taken in front of the neighbor's house. Yang was a babysitter for the family one summer. Henry tells Shawn who rushes to the house with Gus to save Allison, but when they get there, they hear Madeleine's voice calling from inside. So instead of waiting for backup, they are forced to rush inside to save Shawn's mother. But once in, the door shuts behind them, locking them inside. As the police try to get in, Juliet enlists Yang's help as she once knew the house well. Yang gets Juliet in, then promptly loses her in the dark.
Meanwhile, Shawn and Gus have found Allison only to discover she is Yin's new accomplice. Yin ties them up and starts filling the syringe he's going to kill them with when Yang shows up and calls him Daddy. It turns out that Yin had been forcing Yang to kill with him all these years until she finally couldn't take it anymore and let Shawn catch her. She had always longed for the perfect childhood she saw Shawn enjoying as a child, but Yin insists it was far from ideal as the Spencer's marriage was falling apart and Henry ignored Shawn for work. He tells her he was always there for her and pulls her into the fatherly embrace she always wanted. But she knows he'll never change, so she plunges the poisonous syringe into his back, killing him just as Juliet subdues Allison and the SWAT team arrives. Back in Shawn's old bedroom, he and Juliet share a kiss as Lassiter walks in to retrieve a notebook he had left there only to be confronted with a scene more horrific than the Yin Yang investigation. The world as he knows it is over.