Rosamund and her new Lady's Maid, Miss Shore, arrive at Downton for the holidays. Besides the Christmas celebration, plans are being made for New Year's Eve and the New Year's Day pheasant hunt. Matthew will be there for the hunt, but will be leaving for London after Christmas to be with Mr. Swire, Lavinia's father, who is on his deathbed. Sir Anthony Strallan, Edith's former beau, has surprisingly turned down the invitation to the hunt. Rosamund asks that Lord Hepworth, whose father Countess Violet has warm memories of, be invited.
A great pall is cast over the house because of Bates' upcoming trial. Lord Grantham, Mrs. Hughes and O'Brien are being called to testify for the prosecution. None of them believe they have any information that could be used against Bates. Since the papers haven't picked up on the story yet, it's suspected that Sir Richard is using his influence to keep it under wraps.
Grantham is being attended by Carson who tells him Thomas is keen to take the valet job. Robert is reluctant to hire a replacement for Bates anyway, much less replace him with a footman with a history of thievery. Grantham isn't sure he's trustworthy enough for the intimate job of dressing a gentleman. That's good enough for Carson.
Miss Shore takes her place among the servants and, despite having been with Rosamund for only two months, immediately begins offering her opinion. When she finds that Daisy's cooking skills are well beyond that of a kitchen girl, she suggests that Daisy is being undervalued by Mrs. Patmore, leading Daisy to begin snapping and complaining about her job. Daisy is also burdened when Mr. Mason asks her to visit his farm. She tries to explain to him that she didn't love William and only let him think that to keep his spirits up while he was overseas. Her attempts to be delicate about the truth leave Mason's understanding of the matter in doubt.
Meanwhile, Sybil has written to her parents. Having married Tom Branson in Ireland, in a ceremony only Edith and Mary attended, Sybil now reveals that she is pregnant. Robert is unhappy as this means that she cannot change her mind now. Neither he nor Cora have seen Sybil since she left. While he gave his blessing for her to marry, this does not mean that he is ready to welcome her or Branson back into the family
Mary is visibly irritated by Sir Richard who grouses over the time off given to the servants on Christmas Day and New Year's Eve, finds the family's idea of entertainment foolish and is generally suspicious of any contact between Mary and Matthew. At the Pheasant Hunt, Mary admits to Matthew that she is growing tired of Sir Richard, but is still going through with the marriage for reasons she cannot explain, fearing Matthew will despise her if he knew.
Realizing he's not trusted and that Carson won't go to bat for him, Thomas takes O'Brien's suggestion that he find some way to endear himself to His Lordship. Thomas decides to take Grantham's beloved dog, Isis, out into the woods and hide her in one of the Keeper's sheds, intending to be the one to find her.
Meanwhile, the staff fiddle around with a planchette found in the house. Mrs. Patmore doesn't believe in dead spirits speaking, but, with Daisy fretting over Mr. Mason, she decides to run one game for the sole purpose of convincing Daisy that William wants her to visit his father on the farm.
Miss Shore seems to have a lot of contact with Lord Hepworth, explaining that he keeps pressuring her to put in a good word with Rosamund. Countess Violet, on the pretense of reminiscing about his family, invites him to tea, only to confront him about the fact that his fortune is gone. She knows he's pursuing Rosamund for her money and insists he tell her before going any further. Fortunately for him, Rosamund doesn't mind.
Violet is also instrumental in reconnecting Edith with Sir Anthony Strallan who admits he declined the Pheasant Hunt because the war left him with a lame hand. Hoping to reignite their relationship, she assures Strallan that Mary told him lies out of spite. Sir Anthony believes her, but explains that he is not a suitable husband to her, not only because of his hand, but due to his age. A lovely young woman like her should not have to play nursemaid to an old cripple. For plain Edith, having any man call her lovely is reason enough not to give up so easily.
While in London, Matthew was present for the death of Mr. Swire and brought his ashes back to place on Lavinia's grave. He, Isobel and Mary have a small service in the cemetery. Isobel knows that Mary is still in love with Matthew and is tired of him using Lavinia as an excuse not to live a happy life.
At the courthouse in York, Mrs. Hughes, Miss O'Brien and Lord Grantham are questioned about their knowledge of the relationship between Mr. and Mrs. Bates. It isn't until each takes the stand that it becomes clear that Mr. Bates gave such an honest account of events to his defense attorney that the prosecution is not only aware that Lord Grantham encouraged Bates to control himself when he confronted his wife in London during their last encounter, but also that Mrs. Hughes and Miss O'Brien overheard incriminating statements made by Bates both to his wife and to Anna. None of them are happy after being forced to admit to these facts. Under a mountain of circumstantial evidence, Bates is convicted and sentenced to death.
However, there's a chance that they can prevail upon the judge to commute the sentence to life imprisonment which would give them time to appeal the conviction entirely. Even if it works, Bates could have to wait years. He tells Anna to make friends and enjoy her life. He also urges her to forgive Mrs. Hughes and Miss O'Brien for being compelled to tell the truth in court. He's certain even Miss O'Brien doesn't want to see him condemned. Anna makes plans to leave Downton, knowing she could never be happy there and not wanting to subject the family to unfair scrutiny for employing the wife of a murderer.
Never having been enthusiastic about Sir Richard, Robert cannot help but notice that even Mary seems to have cooled on him considerably. He doesn't understand why she is still going through with the marriage and asks Cora if there's something he's missing. Cora admits that he is, finally filling him in on the details of Mr. Pamuk's death.
Later, Robert goes to Mary and asks if she is staying with Richard so that he won't publicize Pamuk's dying in her bed. Mary admits that's part of it. No longer a virgin, she is damaged goods and her prospects are few. Matthew doesn't know, but he's insistent that their relationship is over due to his belief that he is doomed to a life of unhappiness. Robert tells her that he thinks she should break off the engagement anyway, then go to New York City to stay with her maternal grandmother until the scandal blows over.
Mary decides to take his advice and is happy when Anna asks if she might accompany her to America, rather than leave their service completely.
Meanwhile, Robert notices Isis' absence, so all of the men head out into the woods to search for the dog. As they near the Keeper's shed, the group decides to break up for the night, leaving Thomas unable to retrieve the dog. While out in the night, Matthew asks Mary why she thinks he would despise her. She confesses to him her indiscretion with Pamuk. He isn't sure how to feel about it, but, regardless, he urges her to end her engagement to Sir Richard since he's obviously not the right man for her.
O'Brien, disgusted to learn that Thomas is using a living creature to further his ambition, tells him he'd better free the dog soon before something happens to her. The next day, Thomas runs through the woods, only to find the shed door open, and begins a frantic search for Isis. He returns to the house, disheveled, greeted by a happy Lord Grantham who tells him Isis was found shut up in a shed by one of the local boys. When he learns that Thomas's appearance is due to his attempt to continue a search for the dog, he is impressed. With all of the events of late, Grantham believes that everyone deserves another chance and, since Bates is unlikely to return to his position at this point, he tells Carson that he will allow Thomas a go at the valet position.
Daisy goes to visit Mr. Mason who tells her that William was the only one of his children to live to adulthood. He thinks William married Daisy so that his father would not be alone after he died. Mason would like to consider Daisy his daughter. Daisy has never had a family that cared about her enough to think of her as special. It never occurred to her how special she was to William. Mason immediately takes her under his wing, giving her advice on how to handle her position at Downton.
The prospect of relief for Mr. Bates leads everyone to go ahead with the Servant's Ball, after all. Lord Grantham dances with Mrs. Hughes, Carson with Cora and Thomas with Countess Violet. Anna asks if she might withdraw her resignation and Robert is happy to comply. Daisy, using her newfound confidence, expresses to Mrs. Patmore her desire to become an assistant cook.
Mary breaks off the engagement with Sir Richard, citing their incompatability, and earning his ire. Besides having kept her secret about Pamuk, he confirms he'd also worked hard to make certain the Bates trial was kept under wraps. His angry shouting brings a passing Matthew into the room. Certain that Matthew is responsible for all of this, Richard reveals that Lavinia had confided in him that she knew Matthew was in love with Mary. Matthew punches him in retaliation, causing a scuffle that is broken up by Robert. Richard will leave the next morning, intent on making sure that the Grantham name is sullied by both the dead Mr. Pamuk and the murderous valet.
Cora tells Robert that she does not want to miss the birth of her first grandchild. She wants them to visit Dublin and for both Sybil and Tom to be able to visit Downton, as well.
Early in the morning, Mary stops Richard from making a quiet exit, assures him that she wasn't using him and that she doesn't want their last words to each other to be angry. He wonders if she is trying to pursuade him to keep the scandal under wraps and reminds her that he is a newspaperman. However his last words to her are warmer. He tells her that he did love her more than she knew and more than she loved him. Mary hopes the next woman he loves will be more deserving of him than she was.
Having seen Lord Hepworth with Miss Shore one too many times, Anna alerts Mary and the two of them lead Aunt Rosamund to Hepworth's room where they find him in a compromising position with Shore.
Afterwards, Mary meets Matthew outside in the snow, asking if he will ever forgive her for her lack of judgment. He assures her she has done nothing that requires his forgiveness. They were living separate lives, after all. It's time to live them together. He kneels, proposes to her and she accepts.