The gang are wondering if they made the right decision taking over Wolfram & Hart. Angel is surprised to discover that his assistant is Harmony. Eve, their contact with The Committee, explains the set-up: if they don't keep the customers happy, the branch will close, and evil will go elsewhere. Their first test is a human racketeer, about to be found guilty in his trial, who threatens to let loose a deadly virus if he's convicted. The team manage to avert disaster, but at the cost of having a mis-trial declared, by a law-enhanced Gunn. But now they have a breathing space to contain the virus before the next trial. Then Angel opens a parcel, a medallion falls out, and Spike materialises...
The gang fight a necromancer, whilst trying to decide what to do with a ghostly Spike, who keeps fading out into Hell.
Angel saves a woman being attacked by a werewolf, but not before she is bitten. So the gang help her to come to terms with being a werewolf herself. But then a group of gourmets kidnap her for their next dinner.
Spike starts seeing dead people. He's being sucked into hell by the Reaper, the ghost of a psychopathic mass murderer. Fred manages to build a ghost-corporealiser, but the Reaper forces Spike to choose between Fred's life and being solid again. He chooses Fred. The Reaper is corporealised instead, and is locked in a cell for eternity. Spike has learned a limited ability to touch things.
Lorne is desperate for the Wolfram & Hart Halloween party to go well -- it's the event of the year. He's so desperate, he's had his sleep removed. But this means his empathy is now projecting, getting people to do what he says, and his subconscious is manifesting, taking out its frustrations, killing the guests. Mayhem ensues ... resulting in the party being considered to be "even better than last year".
Angel is feeling disconnected. Spike decides the prophecy -- about a vampire with a soul who saves the world and lives again -- is about him. An ancient Aztec demon is stealing the hearts of heroes. Angel and a broken down hero, the ex-W&H postman, have to destroy the demon before it finds the talisman that will make it a god.
Fred is injured by a gang of cyborg ninjas, and Wesley feels responsible. His father arrives at W&H, saying the Watchers Council has re-formed and is thinking of reinstating Wesley. But during an attack by more ninjas he steals an artefact, and uses it to remove Angel's free will. Wesley stops him taking Angel away, but it is only when his father threatens Fred that he shoots him. It turns out it was just another cyborg ninja in disguise.
Spike gets something in the mail that turns him corporeal. Then people start going mad: the balance of the universe has been affected because there are two ensouled vampires who could fulfil the prophesy. Wesley is away, but his deputy reinterprets the prophecy, and says the vampire must drink from the cup of torment that is in Death Valley to bring balance back. Angel and Spike both race off to find it, and fight over it. Spike wins, although he doesn't dust Angel. He drinks, but the cup appears to be a fake. They return to discover the Senior partners have intervened for the time being, putting everything back to normal. Angel is devastated that Spike has beaten him, for the first time. Eve and a mystically tattooed Lindsey were actually behind the event, hoping that Spike would kill Angel.
Harmony is feeling underappreciated and lonely. Then she wakes up next to a dead guy, vampire bitten. She's terrified she will be executed under W&H's new Zero Tolerance policy, so is desperate to find out who killed him. He is also the go-between in a big demon summit, and the demons demand a blood sacrifice as atonement. Eventually, Harmony discovers it was a jealous vamp from the steno-pool. They fight, and Harmony dusts her in front of the demons, who are placated.
Eve puts a soul sucker on Angel, which gives him visions of worthlessness. Meanwhile Lindsey, calling himself "Doyle" and claiming visions from the Powers-That-Be, persuades Spike to be a hero vigilante. Spike removes the creature from Angel, who accuses Eve.
A woman who was abducted and tortured as a child escapes from the mental institution where she has been growing increasingly violent over the last couple of months. She was a Potential, so is now a Slayer, but quite mad. Andrew arrives from the Council at W&H to advise the gang. Spike hunts her on his own, and she captures him, thinking him the one who tortured her earlier, and cuts off his hands, to stop him hurting her again. The gang arrives, tranq the Slayer, and rescue Spike. Andrew insists they hand the woman over to him, since they now can't be trusted, working for W&H. Spike undergoes surgery to reattach his hands. He now fully faces up to the fact he did many evil things in the past.
Lindsey decides to invoke the fail-safe device left by the Senior Partners to control Angel. Cordelia wakes up from her coma with a vision. Lindsey, as "Doyle", tells Spike she is still evil. However, he doesn't kill her, because he could feel that she wasn't. Angel and Cordelia fight Lindsey, and stop the device. Cordelia tells Angel that she came back to save him, but can't stay. The hospital calls: Cordelia died without regaining consciousness.
During WWII Angel goes to rescue a US submarine crew who had stolen a German submarine full of vampires. One of whom is Spike. A captured Nazi mortally wounds the ensign who can repair the boat. So Angel turns him. 60 years later he turns up at W&H, ready for revenge.
A kids TV puppet show appears to be implicated in an epidemic of catatonic children. Angel investigates the TV studio, and is attacked by a demon. He is turned into a puppet, but the gang manage to defeat the demon.
A strange sarcophagus arrives at W&H. It infects Fred with a strange sickness. She is slowly dying, being dissolved from the inside, while the gang races to save her. Gunn realises that he signed the papers releasing the sarcophagus from customs, in order to get his lawyer knowledge "fixed". Spike and Angel dash to England to the source of the sarcophagus. They learn that an Older One has been released, and is consuming Fred. But the only way to save her would kill thousands. Fred dies in Wesley's arms -- then awakens, as Illyria.
Everyone is distraught at Fred's death. They race to find a way to bring her back. But they discover that they can't, and that they must stop Illyria raising her Army of Doom. But she discovers it has turned to dust. She is now alone, and asks Wesley to teach her how to live in this world.
Angel is determined to discover what the Senior Partners are up to. Eve tells him that Lindsey knows, but is now in a W&H holding dimension. Angel, Spike and Gunn go to get him out. Gunn has to stay in his place. Lindsey tells them that the Apocalypse has started, and that they are being distracted from fighting it. Hamilton, a new liaison with the senior partners arrives, to replace Eve.
A family come to W&H for help with their son, who mysteriously survived a car impact. It is Connor. Angel is forced to make Connor kill a demon, by the demon that reshaped all their memories. Gunn, being tortured in the holding dimension, refuses to help the Senior Partners. Wesley discovers the memory alteration that was sanctioned by Angel, and brings everything back. He remembers that he betrayed Angel. Connor remembers how to fight, and kills the demon. He then decides to stop fighting, and go back to his new family, to help protect them.
Illyria rescues Gunn from the Hell dimension. However, Angel thinks she is too powerful, and orders Wesley to find a way to kill her. Things go wrong, and time fractures, dragging Illyria and Angel along with it, so that he sees her killing everyone, then exploding. He manages to change that, and Wesley merely drains off some of her powers. But Illyria may have taught Angel how to focus on the Apocalypse.
Angel and Spike head to Rome, for a knock-about comedy episode involving retrieving the head of a dead demon, and saving Buffy from the clutches of The Immortal. meanwhile, back in LA, a more serious thread sees Fred's parent's dropping in for a surprise visit, and Illyria pretending to be Fred for them, being unwilling to put up with any more of the grief surrounding Wesley like a miasma. This reappearance of Fred devastates Wesley further, and he rejects Illyria.
Angel seems ever more distant and power-hungry, with evidence he may have killed Fred to gain entry to an inner circle of evil. So the gang decide to rescue him. He convinces them it was all a ploy to gain entry, so that he can now identify the players, ready for the final showdown.
It's the final showdown. The team goes off, each to kill a few members of the Black Thorn circle. Angel recruits Lindsey. Harmony betrays Angel to Hamilton, but Connor arrives to help with the fight. Lindsey kills his target, then Lorne kills him. Wesley dies in Illyria's arms, while she pretends to be Fred. Gunn is seriously hurt. But the entire Circle is dead. A brief victory, as Wolf, Ram, and Hart strike back with a horde of demons: the gang squares up for a last big fight...