St. John and Mike are doing a satellite remote control flight test in Airwolf, with Jason and Jo monitoring from the lair. Jason breaks away to meet with his current girlfriend, Kate, a secretary at the Company. They seem to be pretty serious, and Kate convinces him to stop by the Ridgemont Institute to see her old friend, Dr. Sylvia Robertson.
Robertson was also a former Company employee, but resigned to do work involving brainwave technology and artificial intelligence. She walks Jason into a room, where he's attacked from behind and has a serum injected into his neck. Unconscious, he's prepared for microchip implantation. Kate is already under Robertson's influence, and is put to sleep by her handheld device. Later after Jason's surgery is completed, he's brainwashed with negative images of the crew attacking him and Kate with Airwolf, and Robertson convincing him he needs to get Airwolf away from them.
The following week at the hangar, everyone returns and wonders where Jason is, but continues with the satellite project without him. At the Company, Jason, now programmed with the chip, receives a call from Kate, and soon after, feels the pain of the implant when activated by Robertson. Her artificial intelligence program, simply called "Leader," is a combination of every major influential historical figure in the world, and seems eager to forge ahead with gaining control of Airwolf and tries to step on Robertson's toes. Now programmed and relieved of the pain from the chip, Jason deletes all Company files regarding Robertson's research.
Jason calls the crew, saying it's an emergency to get them away from the lair. He then gets a nervous call from Kate to come to the Institute. Once at the Company, the crew is locked up under Jason's orders. He goes to get Airwolf, and on the way, receives a video message from Kate, motivating him to hurry along. The crew tries to break out of their holding room at the Company.
Meanwhile, Jason lands at the Institute and as a precaution, secures the Lady. Once outside, he pulls his gun and demands to know what's going on. To gain compliance and the code to unlock Airwolf, Robertson uses her device to inflict pain. As Jason fights through with sheer willpower, the Leader suggests other modes of gaining compliance.
The crew rigs the lighting to send a charge to break open the door so they can escape. Jason is angry at Kate for tricking him, but softens up when he realizes how scared she is. The crew is at the lair, and uses the satellite they've been testing to locate Airwolf. They cross-reference the area with where Robertson's facility is, and go after him.
At the Institute, the Leader is pressuring Robertson to push Jason harder to turn over Airwolf, at the potential cost of killing his brain. Jason is brought in to see the Leader, and Robertson reveals her plan to use Airwolf to travel the world, reprogramming everyone to live her way. Jason refuses to go along with the plan. The Leader takes control, and activates the chip in Jason's head, causing great pain. With Robertson unable to stop it, Jason sends Kate to get help. The Leader detonates the chip in Kate, and she falls dead as Jason helplessly watches on the monitor.
The crew show up outside the Institute, and St. John forces his way past a security guard. Robertson takes Jason to a room and leaves him to suffer under the Leader's hand after refusing to turn over Airwolf. Not recognizing the true effects from human suffering, the Leader insists upon pushing Jason, and causes him to suffer great pain and hallucinations. St. John finds Jason, and he attacks St. John. He's able to calm Jason and help him out of the Institute. Mike and Jo get Airwolf and blow their way out of its holding place.
Robertson's guard begins choking her, and he is displeased to hear the Leader say that he, too, will be eliminated. Mike flies to the basement area, where the power source to the Leader is. On St. John's signal, Mike fires missiles into the basement, killing staff members and powering off the Leader. Finally, Jason is relieved of his pain as the microchip deactivates.
At the hangar, it's a month later, and with the microchip removed, Jason is still seriously hurting over Kate's death. Jo talks to him to help ease the pain. Jason wonders if Kate really loved him, or if she was just programmed. Jo assures him that their relationship was genuine as they embrace.