Andy and Lucy console each other after the chaotic Miss Twin Peaks contest where Annie was kidnapped by Windom Earle. Cooper, Harry, and Hawk stare at the map, as Cooper mumbles "Fire, walk with me". Pete says the Log Lady stole his truck and drove off toward the woods. Cooper informs Pete that was Windom Earle in disguise. The Log Lady arrives, and says her husband gave her a bottle of oil from a gateway in the woods. The jar smells like scorched engine oil. Hawk brings in Ronnette Pullaski, who recognizes the smell from the night of Laura Palmer's murder.
Windom arrives in a dark, wooded grove with Annie, who is quietly reciting Psalm 141. They reach a circle of young trees with a dark pool at its center. Upon entering the circle, Annie becomes catatonic, and Windom recites a fragment of poetic verse. A ghostly red curtain appears behind the pool. They pass through the curtain and vanish.
At the Hurley house, Ed, Norma, and Doc Hayward bandage Nadine and Mike from the injuries they received in the previous episode. Nadine suddenly regains her memory; she knows that she is 35, and is horrified to see Ed with Norma. She hollers about the missing drape runners and bursts into tears. Mike apologies to Ed for letting his relationship with Nadine get out of hand. Ed is beside himself over what to do.
At the Hayward house, Donna is distraught, having learned Ben is her blood father. Ben and Donna's mother try to console her. Doc Hayward arrives and orders Ben out of his house. Ben's wife arrives and yells at him for his intrusion to the Haywards. Angered, Doc Hayward punches Ben. Ben slams his head on the fireplace and falls down to the living room floor... maybe dead.
At the Blue Pine Lodge B&B, Andrew grabs the safe deposit box key and sneaks off. Pete sees him and demands that he let him in on what he is doing. Andrew tells Pete that the key to Thomas Eckard's puzzle box will be the final thing they need to find out.
Cooper and Harry find Pete's truck in the woods. They walk deeper into the forest. Eventually Cooper says he must continue alone and leaves Harry behind. Cooper hears an owl, then sees the pool of oil in the circle of trees. Harry watches from a distance as Cooper enters the circle and passes through a red curtain which materializes behind the pool. The curtain glows for a moment then disappears, along with Cooper.
Cooper walks into the mysterious room from his dream. There are couches, a zig-zag pattern on the floor, and some statues. The midget wearing the red suit appears and dances into the room and sits in an old chair. A strobe light flickers as Jimmy Scott croons a plaintive jazz ballad, "Sycamore Trees."
Andy arrives in the forest to join Harry. They wait all night, and Cooper doesn't emerge. By morning, ten hours after Cooper entered the Black Lodge, Sheriff Harry and Deputy Andy still are waiting as Andy talks about going into town to get lunch.
At the Twin Peaks Savings & Loan, Audrey walks into the bank and chains herself to the bank vault, in protest of Catherine Martel's development plans for the Ghostwood Estates project and its environmental effect on the forest weasel. The elderly, senile, slow-moving bank president fetches Audrey a glass of water. But before the old and dimentia-striken bank president can call the sheriff, the press, or even understand what is going on, Andrew and Pete arrive with the safe deposit key, intending to open the box left by Thomas Eckhart. Andrew asks the bank president for help in identifying the proper box. With Audrey still chained to the bank vault gate, the elderly bank president walks away out of the vault as Andrew egerly opens the box to find a bomb, which is triggered by the safe deposit box opening. Along with the bomb is a taunting note which reads: "Got you, Andrew! Love, Thomas." The shocked Andrew bearly blurts out the words "oh, sh-" when the bomb explodes. The huge blast blows out all of the bank windows... apparently killing everyone inside the building. The bank president's glasses and some money fall on a nearby pine branch.
At the RR diner, Bobby and Shelly smile at each other. Bobby proposes marriage to her which she accepts, but is reluntant for she is still technially married to Leo, who is apparently still at Windom Earle's cabin, still hanging onto the string to the spider trap. At a nearby booth, Bobby's parents, Major Briggs and his wife are eating together, happy to be reunited. Just then Sarah Palmer arrives with Dr. Jacoby where they sit down at the booth and she delivers a message to Major Briggs, recanting in a garbled voice, "I'm in the Black Lodge with Dale Cooper." I'm waiting for you." From deep within the red-curtained dimension of the Black Lodge, Windom Earle is apparently using the power of the region to communicate through his conduit Sarah Palmer.
In the Black Lodge, the red-suited backwards talking midget (all denizens of the Black Lodge talk backwards in a unworldly voice, which is subtitled) tells Cooper they are in a waiting room and offers Cooper some coffee. Laura Palmer appears, saying she'll see Cooper again in 25 years. The elderly and senile bellhop appears and brings a cup of coffee to Cooper. He is replaced by the Giant who sits down, saying "one and the same." The midget rubs his hands. Cooper starts to drink the coffee only to find it frozen solid. He tips the cup, and some of it pours out. The last time it is like syrup. The dwarf says "wow, BOB, wow. Fire walk with me."
Cooper leaves the room, entering another one that looks exactly the same. He returns to the first room, where the midget says "wrong way". Cooper goes back to the second room. He sees the midget laughing saying: "another friend" (this might be a doppelganger midget). Maddy Ferguson appears and says, "watch out for my cousin," then disappears.
Cooper returns to the first room to find it completely empty. The midget appears again says "doppelganger" and twitches. The Laura Palmer doppelganger (identifiable from her deathly white cataract eyes) appears and says "meanwhile" and screams. Scared, Cooper runs out of the room, returning to the other one. He is bleeding from the chest and has trailed blood on the floor. He stumbles back to the first room, and sees a woman lying on the floor with his own body. The woman is Annie with her throat cut, and him with a stab wound to the chest. A vision of his past.
A little later, Cooper walks into a room with a strange altar like shrine to see Annie. She says she saw the face of the man who killed her: it was her husband. She doesn't respond to the name Annie its actually Caroline, a doppelganger. Cooper is confusing the two.
Caroline is replaced by Laura, and then Windom Earle. Annie watches as Windham and Cooper face off. Windom laughs, and says if Cooper gives him his soul, he'll let Annie live. Cooper says yes, and Windom Earl stabs Cooper. There is a burst of flame and the stabbing rewinds. BOB appears and takes control of Windom Earle, saying he can't ask for Coopers soul, and will take Windom's soul instead. There is a burst of flame, and Windom goes limp, apparently dead. Cooper leaves the room and an evil doppelganger of Cooper appears from behind the curtain.
In the hallway, a Leland Palmer doppelganger with brown hair and white cataract eyes appears in the hall between the two rooms, and says, "I did not kill anybody." The doppelganger Cooper comes into the hall and laughs with Leland. The good Cooper runs back and forth between rooms it seems he can't get out. The doppelganger Cooper catches Cooper, and BOB's face briefly appears and laughs.
That night, Harry finds Cooper and Annie's bodies lying in the forest in the circle as they both stumble out of the red curtain as the gateway to the Black Lodge appears and disappears. Cooper is awake, while a bloodied Annie is not responsive.
Cooper wakes up in his bed at the Great Northern Hotel with Harry and Doc Hayward attending to him. Cooper asks about Annie, and Harry tells him that she is at the hospital and will be fine. He tells Harry and the Doc that he needs to brush his teeth. Once in the bathroom, he begins to put toothpaste on a brush, but then squeezes the tube's contents into the drain. He looks in the mirror and smashes his head into it, bloodying the glass. BOB's face appears in the mirror. As Harry and Doc Hayward knock on the bathroom door in concern after hearing the crash, Cooper maniacally repeats, "How's Annie?" and laughs uncontrollably.
Note: either Cooper is now possessed by BOB, or the evil Cooper doppelganger has emerged from the Black Lodge and is now in our world under the control of BOB. On this downbeat and ambiguous note, the series comes to a close.