Ponch and Jon are riding through Ponch's old neighborhood. Ponch reminisces while they stop, and a Camaro speeds by, nearly causing an accident. Ponch and Jon pursue it to an overpass, where a bunch of teenagers are practicing karate. It turns out that it's Billy Rogers. Jon somehow relives Billy's attack on Baricza in a flashback. As Ponch tries to arrest Billy, Ponch's old gang shows up, led by his friend Carlos. As if things couldn't get worse, Andy Macedon soon shows up as well, triggering a flashback from Ponch of the fight between him and Andy. Things get tense as the theme starts.
Baricza and Bonnie arrive to provide backup, and Baricza takes Billy away. Andy challenges Ponch to a fight, but Ponch isn't interested. At Central, Turner tries to peddle trees to the troops. Getraer informs Jon and Ponch that Andy just sprung Billy. Across town, Andy pulls up in front of his restaurant with Billy, and tries to talk him into joining him as he launches some new ideas. Billy refuses, determined to become the next man in charge of the streets.
Ponch and Jon drop by to visit Carlos' sister, Rosa. As they talk, she tells them that Carlos sometimes goes by the youth center. At the youth center, Billy tries to taunt Ponch, while a female instructor chews out Jon about not following up on their mentoring to the kids the year before. They find out that neither Carlos, nor his gang, the Los Condores, ever comes around the youth center. Outside, two little kids from Los Condores throw fruit at the youth center signs, and then run away.
Andy finds Carlos painting a mural, and makes a deal with him – he'll pay him to paint more walls, so long as he stays out of trouble, especially with Billy and his gang. Ponch and Jon find them, and are apprehensive about Andy's intentions. Andy offers them a ride to the youth center. While there, Andy tells Ponch that he's obligated to help him take over the streets again, starting with changing Billy. He then tries to rope him into the rematch – fair, and by the rules. Ponch shrugs it off and leaves. At home, Rosa nags at Carlos about being mixed up with Andy. Back at the overpass, Billy plots a rumble with Los Condores at the youth center after the supposed match between Ponch and Andy.
At Central, while everyone pegs him about the match with Andy, Ponch denies going through with it. That night at the youth center, Andy announces that he's fighting for peace, not to even a grudge. Then, Ponch shows up at the match like everyone thought he would. The fight begins, and it's a tight, even match. It ends up a draw. After the fight, the two kids are outside beating up Billy's car. As Bonnie and Baricza try to stop them, they try to escape in another car. Billy vows revenge.
Andy is upset with Carlos about the incident, and dismisses him. He tries again to get through to Billy, but he remains steadfast. At Central, Turner's peddling trees again, and offloads four onto Harlan – Grossie's payment, plus $2 ($50 total value) for losing his gin game. That evening, Ponch and Jon are double dating at Andy's restaurant with Rosa and the instructor from the youth center. Andy talks to them about his sincere plan to turn the neighborhood around. Ponch believes him, but Jon doesn't buy it.
As Andy leaves, Billy runs him down in a van. Ponch chases him in his Firebird, but loses him. As Ponch drops Rosa at her home, they find it has been ransacked. Carlos is determined to get revenge, but Ponch makes him promise not to get into trouble. At the hospital, while helping Andy check out, Jon and Ponch tell him that his attacker was Billy. They go back to Rosa's house, and she tells them that she fears that Los Condores are out to avenge the vandalism on their home and are looking for Carlos.
While working on his mural, Carlos gets company from Andy. Then Billy and his gang shows up, ready to start trouble. Moments later, Ponch's Firebird pulls up and he and Jon jump out. When Jon calls for them to drop their weapons, they do so, but start fighting. Ponch, Jon, and Andy hold their own, defeating them all.
Presumably days later, Andy with the instructor from the youth center, Turner, Baricza, Bonnie, Grossie and Harlan, along with Ponch and Jon on their motors and members of three gangs arrive to help Carlos with his mural. They plan to plant trees to enhance the mural and beautify the area. The episode ends with freeze frames of laughter, after the CHPs argue over how to arrange the trees and Andy yells for them to shut up and get to work.