Raj waits in an alley to meet his girlfriend Mina, a dancer in a local Bollywood production, who he has been secretly dating. She sneaks outside on a break from the show, but is nearly killed when a runaway truck narrowly misses her. A distraught Raj goes to the police station, where he confesses to not only hurting Mina, but all of the women he has loved. He claims he’s cursed.
After a police department baseball game, the whole gang goes to a bar to celebrate McNab's birthday. But, as the waiters bring out the cake, Shawn spots a hooded man by the register with a bulge in his jacket. He runs to warn Lassiter who pulls out his weapons just as the hooded man starts to fire. After a barrage of bullets, the man manages to escape. The cops think it was an attempted robbery but Shawn says the man came there specifically to kill one of them.
After Agatha, a student at a Catholic college, jumps off the roof of a building, Gus drags Shawn to the school to investigate as a favor to an old teacher, Father Westley. Lassiter and Juliet are already there speaking with Westley and headmaster Father Bard, who explain that Agatha was a model student until three weeks ago when she suddenly started acting irrationally. Lassiter thinks it's murder but Shawn is leaning towards suicide. Father Westley has an alternate theory. He believes she was possessed.
Lassiter needs Shawn and Gus' help. Unexplained things have been happening in a small town outside his jurisdiction. Sheriff Hank is an old friend of his and since Shawn and Gus have a talent for finding something out of nothing, Lassiter enlists their services to uncover the truth about the strange occurrences. Hank explains to them that wooden fence posts around the town have been stolen, someone has poisoned the water and there's a stench in the air that Gus attributes to cat urine. But as Hank shows them around, they realize that Old Sonora is not a real town.
Chief Vick calls Shawn and Gus to the forest to aid in the search for billionaire Warren Clayton's downed plane. They arrive at the wreckage before the police and find Clayton inside, barely alive. As Gus tries to call for help, Shawn notices a "Wiswall" insignia inside the plane. He also sees that the altimeter reads 118 and spots metal clip with a picture of St. Dwynwen on it. As Clayton starts to fade, he says something about wanting to make amends and be a good father. He manages to cough out the word "Waterloo," then in his last breath asks them to find out who killed him.
Shawn and Gus are on the slopes on their ski vacation in Whistler, British Columbia when Shawn spots wanted international art thief Pierre Despereaux. Despereaux is so good, he's never left enough evidence behind to be formally accused and so promptly gives Shawn and Gus the slip. Shawn goes to the Mounties for help, who need very little convincing of his psychic abilities. Deputy Commissioner Dykstra calls Lassiter to ask for Despereaux's files to be sent up, and Lassiter insists on being part of the investigation. Lassiter and Juliet arrive in Canada just in time to meet Shawn and Gus
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.
Lassiter shows up to work one morning with his kid sister Lauren in tow. He explains that Lauren is a film student there to do a police documentary. Lassiter plays to the camera, trying to impress his sister with his "large and in charge" demeanor. Suddenly they get the call that there's been a murder at the zoo. Lauren films as officers prepare to leave for the crime scene.
After a criminal named Sergei Czarsky has his court case thrown out because of a critical error Shawn made while investigating him, all of SBPD is furious with Shawn. When Internal Fairs makes it a point to hold SBPD accountable for their mistake, everyone's job is in jeopardy. Shawn plays it off like it's no big deal, but Gus and Henry see otherwise. Vick then places Shawn on suspension, and makes the difficult decision to fire Henry.
The SBPD are on a stakeout watching a drug deal play out on their monitors. They are about to take down a criminal they’ve had their eye on for over four months. Then suddenly, through the monitor, the SBPD sees Gus walk in pushing a room service cart. Gus starts to distract the drug dealers. Shawn then jumps out of the room service cart and starts to snoop around. He finds a bag of prescription drugs, but gets caught almost right away. With guns pointed to his head, Shawn asks the drug dealers if they are selling these drugs out of this hotel room.