South America, 1988. Herr de Flores' second-in-command Karl completes his calculations, and they and their neo-Nazi mercenaries prepare to set off for Windsor, England, for the dawning of the Fourth Reich. They take with them a silver bow in a carrying case. Three hundred and fifty years earlier, Lady Peinforte and her servant Richard wait for an aged mathematician to finish his calculations; once complete, the Lady kills the mathematician and uses his blood to complete a potion which enables her and Richard to travel forward in time to await the return of the Nemesis. They take a silver arrow with them.

23 November 1988: the Doctor and Ace are enjoying the sounds of a jazz quartet when the Doctor's watch alarm goes off, necessitating a return to the TARDIS to find out what he was trying to remind himself about. On their way back they are shot at by two figures wearing what appear to be large stereo headphones, but evade the attack and reach the TARDIS safely. There, the Doctor uses Ace's new super-hi-tech ghetto blaster -- which he built to replace her old one, destroyed by the Daleks -- to track down the appointment he made, and discovers that the Earth is in danger of annihilation, which he'd completely forgotten. A meteor is approaching the Earth, and it's got something inside...

The TARDIS materializes in the cellars of Windsor Castle, where the Doctor tells Ace to search for a silver bow. The castle shakes to its foundation as the meteor lands outside the city, and the Doctor realizes that Nemesis, the comet he launched into space 350 years ago, has finally returned. Ace finds the empty case where the bow was kept and a plaque indicating that if a place is not kept for the bow, the entire silver statue will return to destroy the world. The Doctor, who seems more worried by the flickering electrical power in the cellars, tells her that legend is correct...

Richard and Lady Peinforte watch from a distance as a police squad car arrives at the crash site and police emerge to protect the meteor. Peinforte is upset that the statue is now under guard, but Richard points out that it's useless without the arrow and they simply have to wait their chance to seize it. The Nazi mercenaries also arrive, but de Flores advises them to wait; the British government is unaware of the statue and its power, and the mercenaries can rely on the police to guard it until it's cooled down enough for them to return and collect it.

The TARDIS materializes in Lady Peinforte's study in 1638, where the Doctor finds the mathematician's body and his calculations. The Doctor explains to Ace that Lady Peinforte created a statue of herself out of the living metal validium, which fell from the sky near her home. He studies a nearby chess set while explaining that Lady Peinforte used the statue's arrow and a rudimentary knowledge of time travel -- mostly black magic -- to travel forward in time to await its return to Earth; for validium is a dangerous force capable of terrible things. Ace is confused, but the Doctor promises to explain later.

The police guarding the Nemesis find that their car's battery has gone dead, and then pipes rise from the ground and release a powdery gas which knocks them unconscious. The two men who attacked the Doctor and Ace arrive to ensure the police have been taken care of, and something reprogrammes them via their headphones. Meanwhile, Richard whimpers in confusion at this strange new world with its noise and foul air, while Peinforte dreams of what she will do with the Nemesis -- particularly the revenge she will seek upon the Doctor, whose secret she has discovered...

The TARDIS returns to present-day Windsor Castle, where the Doctor and Ace break into the royal apartments and seek the Queen, hoping to get the army mobilised. Unfortunately they only find the Queen's bodyguards, who aren't convinced by their allegations that the entire Earth is in danger. The Doctor hypnotises the guards just long enough for him and Ace to escape and return to the TARDIS, and on the way back they pass a painting of Ace from 200 years ago, a souvenir of an adventure they haven't had yet.

The Cybermen recognize the Doctor despite his changed appearance, but before they can do anything, the neo-Nazis open fire on the Cybermen and a pitched battle breaks out. The Doctor and Ace shelter in the crater left by the meteor, as the Doctor explains that the very same thing happened last time -- only that time it was a battle between the Roundheads and Lady Peinforte's soldiers. Peinforte opens fire on the Cybermen with gold arrows dipped in poison, and when a dead Cyberman with a gold arrow sticking out of its chest falls into the crater, the Doctor realizes that she's nearby. After firing a few more arrows Peinforte waits for the mercenaries and Cybermen to wipe each other out so she can seize the Nemesis.

The Doctor and Ace decide it's too dangerous to remain here and flee for the TARDIS, taking the bow with them; Karl and de Flores also decide to retreat, and take the case, unaware that it's now empty. Peinforte sees the Doctor fleeing, recognizes him, and fires a gold arrow which misses the Doctor and sticks in the TARDIS door.

The Cybermen slaughter the remaining mercenaries, seize the statue, cut it free of the rocket sleds and take it to a place of safety. de Flores, having witnessed the Cybermen's death, gets out a pouch of gold dust from storage; meanwhile, Richard and Lady Peinforte, searching for the statue and the bow, are followed through the outskirts of Windsor by two skinheads who accost them in a deserted street and demand money.

The Doctor and Ace return to 1638, where Ace sees that the mathematician's body has been moved. The Doctor destroys a scrap of paper which contained hints that set the mathematician on the right track, and, noticing that the pieces on the chess board have been moved, he makes another move and then leaves, followed by a very confused Ace. The TARDIS materializes in the forest, where the Doctor uses the bow to track the location of the statue; the bow begins glowing more brightly as it approaches a concentration of validium. Validium was originally created in the Old Time as a defense for Gallifrey, but some of it got away to Earth; the Doctor, however, launched the statue into space, separating it from the arrow and bow to prevent anyone from gaining control of it.

The Cybermen land their ship in the forest and take the statue to Lady Peinforte's tomb, where the statue begins to glow as the bow approaches. The Cyber Leader intends to call for reinforcements, believing that the complete Nemesis will soon be in his possession, but the Doctor and Ace use her ghetto blaster and a jazz tape to jam the transmissions. As they continue towards the crypt, they notice the two skinheads who tried to mug Richard and Lady Peinforte, stripped and hung upside-down from a tree.

Richard is confused to find llamas grazing in the grounds of Lady Peinforte's estate, which has been turned into a safari park. Lady Peinforte takes a ghoulish delight in pointing out Richard's own grave, near her own -- and the glowing arrow indicates the presence of the statue inside. The Cybermen watch as Lady Peinforte enters the crypt, believing that recognizance of her own death will drive her mad, but their plan backfires; Richard and Lady Peinforte barricade themselves in the crypt and drive the Cybermen off by firing gold arrows at them.

The Doctor and Ace find the two headphone-wearing men guarding the Cybermen's ship, and while the Doctor lures them into the woods, Ace flings some nitro-9 into the ship, destroying it. When the Cybermen return they accuse their guards of betrayal and kill them, but the Doctor assures the shocked Ace that the two men were as good as dead already. de Flores and Karl, having witnessed the ship's explosion, arrive and offer to make an alliance with the Cybermen; in return for taking care of Lady Peinforte, the Cybermen agree to share the Nemesis and divide the planet between them. In fact, the Cybermen intend to dispose of de Flores and Karl once they have the statue, and de Flores intends to betray them as well.

Lady Peinforte realizes that the statue has been sealed inside her grave, and forces Richard to help her open it. Inside they find the Nemesis, but before Peinforte can do anything with it, de Flores and Karl arrive and take them prisoner. Richard panics, flings the arrow into the tomb and drags the protesting Peinforte out while Karl and de Flores are blinded by the blaze of light. The Nazis allow them to go, intending to use the Nemesis to dispose of the Cybermen... but as the Cybermen enter the tomb, they finally realize that they don't have the bow after all.

The Doctor prepares to go to the crypt, unarmed, with the bow, in order to place it in the statue's hands and activate the validium. Ace seems nervous but refuses the Doctor's offer to let her return to the TARDIS. Ace later confesses she's frightened but is determined to see it through.

As the Doctor approaches with the bow, the statue begins to stir, and while the Cybermen are distracted de Flores flings gold dust into the Leader's face and attempts to escape. But as the Cybermen set off in pursuit, Karl surrenders and turns de Flores over to them, asking to be made one of them; they agree, and take de Flores and Karl back into the crypt to begin their conversion. Meanwhile, Lady Peinforte wonders why Richard saved her life when she has always treated him badly, and acknowledges that he is a good man while she is evil. But she is not yet ready to give up. She has one weapon left -- her knowledge.

As the Doctor and Ace approach the crypt, Ace's jazz tape stops, freeing the Cybermen to call for reinforcements. But as they are about to do so the Doctor and Ace arrive, manoeuvre around them and get the bow into the statue's hands, bringing it to life. The Doctor takes the bow back and flees, knowing the statue will follow him. Lady Peinforte and Richard hear the cry of the Nemesis coming to life, and Peinforte begins to go mad as her dreams of power overwhelm her.

The Doctor and Ace stop off back in 1638 to pick up the mathematician's calculations, which the Doctor doesn't want falling into the wrong hands, yet. Ace demands to know if the person who eventually steals the calculations is the same person who stole the bow in 1788. Who brought validium to Earth in the first place? What's *really* going on? The Doctor simply moves a few more pieces on the chessboard and tells Ace to take the bag of gold coins which were to be the mathematician's fee; the Cybermen will attempt to stop him from launching the Nemesis back into space, and Ace must hold them off with the coins and her slingshot while the Doctor recalculates the launch trajectory.

The Cybermen head back to the warehouse to stop the Doctor from bringing the statue to the rocket sleds, and as soon as they've gone, Karl overpowers the remaining Cybermen and rescues de Flores; he was simply lulling them into a false sense of security so he and de Flores could escape when it was safe. Karl and de Flores escape.

Richard and Lady Peinforte are also trying to return to the warehouse, and Richard tries hitch-hiking; it doesn't work until Lady Peinforte stands in front of a large limousine, and the rich American tourist inside offers them a lift. Mrs Remington is visiting Windsor to trace her roots, as her family once lived in the area, and she's very intrigued by the two eccentrics she's giving a lift to.

The Nemesis arrives in the warehouse, and Ace watches in awe as it settles into place in the rocket sleds. As the Doctor prepares to launch the Nemesis at the Cyber-fleet, the statue tells Ace that since Peinforte named it Nemesis, that it what it now is; the spirit of retribution. The Cybermen arrive, and Ace leads them on a chase through the warehouse, picking them off one by one with her slingshot and gold coins; eventually she's trapped with three Cybermen and only one coin, but she manoeuvres around them such that two Cybermen shoot each other and she shoots the Leader.

The Doctor checks on the Cyber-fleet's location, trying to ignore the Nemesis' plaintive pleas for freedom; "things are still imperfect," he tells it. He uses the rocket sleds to destroy the last two Cybermen who are threatening Ace's life, but then de Flores and Karl arrive and demand the bow. The Cyber Leader, however, has not been destroyed after all, and it now kills de Flores and Karl and demands the bow as well. And then Peinforte arrives, still obsessing over the power soon to become hers. If the Doctor does not hand the bow over to her, she will reveal all his secrets; the truth about the Old Time, the Time of Chaos... But the Doctor hands the bow over to the Cyber Leader, who ignores Peinforte as she desperately tries to call the Doctor's bluff and reveal the truth. Peinforte was a pawn in the Doctor's game all along, and when she realizes the truth she flings herself onto the statue and is absorbed into it.

The Cyber Leader crushes Ace's jazz tape, demonstrating how all such foolishness will be dealt with when the Cyber-fleet turns Earth into the new Mondas. The Doctor asks the Nemesis if it understands the Cyber Leader's instructions and then launches it while Mrs Remington stands outside, taking photographs. The Doctor and his companions watch on the ghetto blaster as the Nemesis travels to the heart of the Cyber-fleet... and destroys it. The Doctor only asked if the Nemesis understood the Cyber Leader's instructions -- he didn't tell it to obey them. The Cyber Leader is about to kill the Doctor when Richard grabs the gold arrow which is still sticking in the TARDIS' door and stabs the Cyber Leader in the chest unit, destroying it.

Richard wonders how he will live, stranded in this strange time, but the Doctor and Ace offer to give him a lift home to 1638. While they relax at Lady Peinforte's former home, the Doctor and Ace play chess and Ace finally works out that the Doctor deliberately launched the Nemesis to lure the Cybermen to Earth and finish them off. But there's still one question the Doctor hasn't answered...