A group of monks with a wagon enter a village and their leader, Father Angelo, demands a house, and battle the villagers when they refuse. The other monks are skilled kung fu fighters and make short work of the villagers. They round up the house's staff and lock them in the cellar, then bring in their wagon. Angelo asks God for forgiveness and then opens the box as the servants scream…
The Doctor prepares to take Rose to 1979 to take her to see Ian Dury and the Blockheads in 1979. They land but find themselves at gunpoint by English soldiers and discover they've arrived in 1879 in Scotland. The Doctor and Rose try to pass themselves off as Scottish without much luck. The Doctor identifies himself as a Doctor and they are invited to approach the soldiers' carriage… where Queen Victoria is seated. She confirms the Doctor's identity (thanks to his psychic papers) and accepts them. She is travelling to meet with Sir Robert McLeash and insists they accompany her.
The Queen's party arrives at the manor house were Sir Robert looks on… as does Father Angelo, disguised as a butler. Angelo warns that if Sir Robert doesn't cooperate, his wife will be devoured. Sir Robert goes out to greet the Queen who is glad to be back at the Torchwood estate. The soldiers secure the place and take out a box, which they warn the Doctor to disregard. In the cellar, a cloaked man silently gestures that the servants should remain quietly.
Sir Robert shows them a magnificent telescope built by his father while the Queen talks about how her husband Albert used to tell her about the legend of a wolf in the area. Father Angelo interrupts before she can pursue the matter but the Queen says they'll discuss it later… and there's a full moon that night.
In the kitchen, the "servants" (brother Angelo's fellow brothers) prepare drinks for the guards while Rose finds a servant girl in her closet. The drinks are drugged and the brothers quickly carry them away. Rose talks to the girl, Flora, and takes her to see the Doctor, but they find a drugged guard and the disguised brothers grab them both. They tell the Doctor that Rose has been delayed and the Queen talks of how she hoped she could get a message from her dead husband Albert. She then asks Sir Robert to tell them a ghost story about the wolf.
In the cellar, Rose and Flora are locked up with the other servants, who cower in fear before the robed man in the cage. He opens his eyes to reveal solid black animal-like eyes.
Sir Robert talks about the legend of the ghost wolf and how livestock are found ripped apart and children occasionally missing. Below, Rose approaches the man in the cage and he talks of how his body is elsewhere and a creature lurks within him. The man talks of Earth as if he is an alien, and how he plans to bite Queen Victoria and begin the "Empire of the Wolf." The brothers open the cellar doors to reveal the moo which shines down on the man in the cage. Before Rose's eyes the man transforms into a wolf-like humanoid creature. She tells the servants to ignore him and pull on the chains in an attempt to break free.
Brother Angelo begins to chant while Sir Robert apologizes for his part in the deception. Angelo disarms Reynolds when he demands answers. The Doctor and Sir Robert run down to the cellar as Rose breaks free, and they look on as the creature bursts free. They get everyone out of the cellar and the Doctor seals the door behind them.
The Queen draws a gun on Brother Angelo who is unimpressed, but she shoots him. The servants arm themselves while Sir Robert is reunited with his wife, Isobel. The Doctor hears the creature burst free and spots it approaching, and runs as the servants open fire without effect. The servants are locked in as the brothers wait outside, and the Doctor tells the servants to flee upstairs. They ignore him and the Doctor flees with Rose. They find Victoria, who has taken the box from the safe. They try to get out but the brothers open fire, driving them back into the house. With the wolf closing in, they run upstairs with the wolf in pursuit. Captain Reynolds delays the creature long enough for them to escape to the library and lock the doors.
The doors shouldn't hold the creature back, but it retreats without attempting
to enter. The Doctor concludes something in the library is holding it back. The Queen demands answers and the Doctor explains it is some kind of alien werewolf. Lady Isobel notices that the brothers are wearing mistletoe and starts brewing the mistletoe in water, while the Doctor figures the library is varnished with mistletoe and starts going through the books.
The Doctor finds a book showing that a shooting star landed in 1540 and concludes it has been going from body to body until England could provide an empire suitable for it to conquer space with steam-driven spaceships. The Queen reveals she has the Koh-i-Noor diamond with her, and how Albert kept having it cut down because he wasn't happy that the "shine" was correct. The Doctor concludes that Albert visited the house and worked with Sir Robert's father to set a trap within a trap for the wolf.
They're interrupted when the wolf climbs in through skylight then falls through. They quickly get out and get to the kitchen. The wolf corners them but the servant throws a bucket of mistletoe-water in its face, driving it back. They make it to the telescope and sir Robert volunteers to stay behind and hold the creature off with a sword. The Doctor concludes that the telescope is involved and takes the diamond from Queen Victoria. Outside, the wolf disposes of Sir Robert within seconds.
The Doctor has determined the telescope magnifies the light and he and Rose struggle to get it into position facing the moon. With the diamond in place, the moonlight strikes the wolf as it charges in. The amplified beam drives the wolf up into the air and then transforms him into his human host. The boy begs for release and the Doctor turns up the beam, releasing him once and for all. The Doctor notices that Victoria has a scratch but she says that it was caused by the splintered door and refuses to let him see it.
The next day the Queen dubs them Sir Doctor and Dame Rose. The Doctor assures her that her husband had "contacted" her through the diamond to save her life. Then the Queen exiles them from the Empire, warning them that they consort with black magic and they are steeped in terror and death. The Doctor and Rose heads back to the TARDIS and he reveals that the Queen was a haemophiliac and passed it on to her descendents. He suspects that it will take as much as 100 years for the wolf cell to mature.
Back at Sir Robert's manor, the Queen says goodbye to Lady Isobel, who plans to tear the house down. The Queen says the events will not be forgotten and Sir Robert's sacrifice will not be in vain. She says that she will have an institute built to find such strange happenings, and she will call it the "Torchwood Institute." She warns that if the Doctor returns, Torchwood will be ready for him.