Ponch and Jon are out patrolling in Ponch's old neighborhood. They receive a call over the radio when some kids steal some motorbikes from a nearby store. They chase two of the kids until they split up. Jon apprehends one of the kids, but Ponch loses the other. When he speaks with Rivas, an old friend working at a parking lot and a reformed juvenile, Ponch is given a false lead. After Ponch leaves, Rivas opens one of the cars on the lot and helps the other thief, a girl named Teri, escape to safety. The theme starts as Rivas realizes what he's done.
The kids are hanging out at a car wash/taco stand waiting for Andy Macedon to arrive. He shows up to pay the kids for their work. Everyone but Teri is paid. He used the shares of her and Billy, the kid that was apprehended by Jon, to get him released from juvenile hall. At Central after briefing, Getraer explains that Ponch and Jon can cut the Billy case lose, as the system released him because he has no prior convictions and he has a good lawyer who's in "somebody's" pocket.
Jon and Ponch go back to the parking lot where Rivas works so they can talk to him. His boss tells them they can find him at the youth center where he volunteers. At the youth center, Teri is trying to convince Rivas to join Andy's gang. He refuses and tries to convince her to leave. Ponch and Jon arrive to speak with Rivas. Jon sees Teri practicing gymnastics, and the youth center manager tells them that while Teri's good, she doesn't really care, and she's there because she has to be; she's on probation. He fills them in on Macedon, which turns out to be an old acquaintance – or rather, bully, of Ponch's from the old days.
As they leave the youth center, Ponch sees two guys trying to break into his Firebird. They chase the vandals, until a motorcycle cop pulls them over. After a verbal scuffle with the jerk of a cop, they go to a local restaurant that Macedon frequents. Macedon loses patience with being questioned and breaks a plate. Macedon's answers to Ponch's questions give Ponch the idea to use the youth center to try to draw the kids away from Macedon, using gymnastics and karate.
Macedon's gang is out stripping a car until Baricza arrives. When he tries to stop them, Billy uses karate on Baricza. He's losing the battle until he draws his gun (the infamous, solitary moment in the series when a gun is drawn on screen). The kids drive away in their van. That night at the youth center, Macedon drives up outside and see kids flocking to it. Inside, Bonnie shows off her gymnastics skills and teaches the girls. Teri shines when she does somersaults. Meanwhile, Ponch and the guys teach karate. Rivas is paranoid that the CHP's presence at the youth center will cause trouble, but Ponch promises otherwise.
Out on patrol, Ponch and Jon pass by the gang's van going in the opposite direction. They turn around and follow, which then becomes a chase when the kids realize they're being followed. While trying to get away, the van runs off the road and turns over. The driver jumps out and leaves Billy to fend for himself. He's arrested again by Baricza. That night the youth center is buzzing, and Macedon's kids are also there. Teri is being noticed when doing gymnastics, and she's now putting her heart into it.
When Ponch begins to teach karate, the gang disrupts. Macedon arrives and tries to goad Ponch into a fight. Since Ponch refuses, it makes him look like he's afraid, so the kids begin to follow Macedon and his gang out of the center. The next day Rivas gets fired from his job because of a fender bender between two customers. Ponch and Jon arrive to try and salvage his job, but Rivas feels it's no use and leaves. Rivas meets with Macedon at the restaurant. He notices that the maitre d is the same man that got into the fender bender at his parking lot job. He realizes that Macedon set him up to be fired so he'd come running to him for a job. Rivas accepts a driving job from Macedon.
With money in his pocket, he asks Teri out on a date, but she declines, now that she's straightening out and regaining interest in her gymnastics. At the youth center, Ponch arrives to speak with Rivas. He sees that it's back to how it was before – very few kids are there. Teri gives Ponch the news that Rivas is working for Macedon.
That night at the car wash, Macedon is telling the gang what he wants them to steal the next day. Ponch arrives, and as they talk, Macedon gives him a cheap shot to the abdomen. A fight ensues, and Andy cheats, as the kids hand him weapons to use on Ponch. Rivas stops them, and then they begin to help Ponch instead.
Ponch defeats Macedon and Teri volunteers to testify against him. The rest of the gang stands behind her. The episode ends with freeze frames of Jon and Rivas, nonverbally acknowledging Ponch's heroic feat in fighting in honor of the kids.
