While the gang is busy with other tasks, Lilah sneaks into the hotel basement to talk to Angelus. She wants Angelus to go and kill the Beast before it gets her. They seem to be close to striking a deal when her presence is noticed. Wesley chases her through the sewers and catches her. She tells him that she didn't steal Angel's soul and he believes her. He also finds she has a book with passages about the Beast. His copy of the book doesn't have the passages because hers is from another dimension. He figures out that the reason there's no mention of the Beast in any book and the reason Angel can't remember him is that all traces of his existence have been wiped clean (except for Angelus' memories because his mind wasn't around when the spell was cast, or something to that effect).
Meanwhile, Angelus tells the gang that they are all morons for not figuring out that the Beast isn't the big bad, he's one of a bigger bad's minions. This fact is proven later by a cut scene that shows the Beast offering an unseen entity some kind of artifact fashioned from his own bones.
There's more chaos in the relationship realm because Gunn and Fred break up, Wes almost declares his love for Fred, and Angelus reveals the fact that Wes slept with Lilah to Fred. Angelus is still causing problems with his words. Cordelia, in the meantime, has a vision that supposedly shows her a spell that will restore Angel's soul. Gunn and Connor go collect the skull they need while everyone else gets the rest of the ingredients ready.
The gang performs the spell and it looks like it's a success. They have Angel sing and Lorne declares that it really is him. Angel insists that he stay locked in the cage just in case the spell's effect is only temporary. He gives the others orders but Cordelia stays behind. She accuses him of being afraid of having to face the others after what he's said as Angelus. He agrees and she unlocks the cage. Suddenly, his face vamps out and he bangs her against the cage. Angelus heads upstairs and pretends to be Angel to Fred and the others. He leaves the hotel with them thinking he is really Angel.
When Cordelia comes to, she tells them what happened. Everyone takes off after Angelus except for Cordelia and Lilah. Angelus, unable to find fresh food on the streets due to the overabundance of vampires, heads back to the hotel. He knocks Cordelia down and chases Lilah around the hotel. Just when it looks like Lilah has eluded him, Cordelia grabs her by the arm. Lilah says, "He's going to kill us all." Cordelia replies, "I know. That's why I let him out," before stabbing Lilah in the throat.