With two factions of Daleks involved in a race war on Earth, the Doctor takes care of old business by having the Hand of Omega ceremoniously but quietly buried in a churchyard. His actions do not go unobserved, and leaving behind a bored Ace without a purposeful outlet could spell trouble as well.
The Doctor plans to let one of the Dalek factions have the Hand of Omega (but not too easily, of course) while keeping Gilmore and his military men preoccupied in a safe territory, but that plan could be threatened by a mole in their midst and a miscalculation on the Doctor's part.
The Imperial Dalek Emperor reveals himself to be an old, familiar adversary of the Doctor. Now with the Hand of Omega, the Imperial Daleks expect to rule over both time and the Time Lords. The only snag in the Doctor's plan to thwart this may come from the fascist mole in Gilmore's unit - discovered and detained but escaped to cause mischief, putting both Ace's life and the Doctor's plan at risk.
The Doctor and Ace arrive on the earth colony of Terra Alpha, a colony that is under the misguided dictatorship of Helen A. On Terra Alpha, sadness and misery are capital crimes, and "killjoys' (anyone who does not adhere to these strict laws) are executed on the spot by Helen A's secret police, a motley crew of female assassins known only as "The Happiness Patrol". The Doctor and Ace make it their mission to put a stop to Helen A's harsh regime, but that's all easier said than done. What with The Happiness Patrol, undercover snoop Silas P, and Helen A's carnivorous ...
Earth faces imminent destruction. Nemesis, a comet containing a statue composed of validium (living metal) is due to strike, needing only its bow and arrow to achieve critical mass and become active. Four converging parties know of its power: The Doctor, Nazis assault troops from South America, a 17h century noblewoman steeped in the black arts (in whose image the Nemesis statue was fashioned), and discreet but lethal extra-terrestrials.
As hostilities break out between factions vying for ownership of the comet, the Doctor goes after the worst of the lot - Cybermen, using Ace's upgraded boom box to flood Cyber Communications with jazz music while trying to locate the whereabouts of the fleet beyond this mere scouting party.
With the Cyber Fleet poised nearby, the Doctor may have no choice but to let them have Nemesis. Meanwhile, Lady Peinforte and Richard navigate modern society, De Flores encounters an open betrayal, and Ace combats Cybermen with a slingshot.