Patrick Jane, a consultant with the California Bureau of Investigation, is standing on a street outside a crime scene amidst reporters, law enforcement and neighbors. A young man is being escorted into a police vehicle and taken into custody. Patrick scans the entire area, noticing little details like a tattoo on the forearm of a worker from the medical examiner's office. A press conference is being held by the parents of a girl who disappeared and had now been found dead. The parents are holding hands as the father addresses the crowd. Patrick watches closely and notices the mother pulling her hand away from her husband for a split second. Patrick enters the family's home and goes to the kitchen to make himself a sandwich and some tea. While eating the sandwich, he examines a board that has some family photos pinned to it. He focuses on some photos that look like they were taken in a photo booth. The daughter is sitting on her father's lap and looks slightly uncomfortable.
The mother enters the kitchen and Patrick introduces himself, saying he's there to help her. They sit down to talk and he tells her that he knows what she's going through. She tells him that he couldn't possibly know, so he begins to outline details about herself and her life, just as if he's known her for a long time. She asks if he's psychic and he replies that he just pays attention to things. He continues on and asks her why she suspects her husband of murdering their daughter. She tells Patrick that the relationship between her husband and daughter has changed recently but that both wouldn't admit anything was wrong. Patrick asks if she's confronted her husband with her suspicions, because a wife can tell if her husband is lying. She says no and that the police have arrested the right person. The father enters the room and Patrick introduces himself. He then proceeds to abruptly ask the father if he's killed his daughter. When he answers no, the wife begins to cry. She gets up and leaves the room as the father becomes upset with the accusations. She returns with a gun and proceeds to shoot the husband in the chest four times. The police rush in from outside to find the husband dead on the floor, the wife dropping the gun and Patrick standing there in the middle of the situation.
Palm Springs, California - Two Weeks Later
A couple of friends are returning to a house after golfing. A man is found dead on the floor with a golf club beside him and a woman found dead in the bedroom with a smiley face drawn in blood on a wall. A team from the California Bureau of Investigation arrives at the airport but needs to split up when Agent Grace Van Pelt has made the mistake of checking her baggage. Senior Agent Teresa Lisbon tells Van Pelt to get her bags, take the second rental car and head to the sheriff's department and coordinate obtaining everything they'll need. Teresa leaves the airport with the rest of the team.
As the team arrives and walks toward the medical examiner's building, Patrick gets out of a cab and greets them. Teresa tells him that he shouldn't be there because he's been suspended. Patrick tells her that he knows the case deals with Red John and that he should be involved. He says that Red John is his and is very insistent about participating in the investigation. Teresa reiterates that he's on suspension and tells the officer at the entrance not to let Patrick in. Teresa receives a call from her boss while walking down the corridor. Patrick has gone over her head to get permission to work the case and enters the morgue with the team. The medical examiner states that the male victim is Gregory Tannen and the female victim is Alison Randolph. She discusses her medical findings with the team, as Patrick studies the two bodies. When a team member suggests that the victims were lovers, Patrick says no, and that the male victim was gay. The medical examiner says that a Dr. Wagner was there to make the identifications and might know what the relationship was between the victims.
Teresa finds Wagner sitting in the hallway and introduces herself. She learns that Wagner worked with Gregory Tannen and that the Randolph family had been patients of their practice for years. Wagner also informs the team that Gregory Tannen was gay. The team goes to examine the crime scene and meets an investigator who shares his theory on how Red John committed the murders. Patrick goes off to study the crime scene by himself. He enters the bedroom and walks over to examine Alison's makeup table where a couple of photos and a greeting card are taped on the mirrors. He then glances up and notices the smiley face drawn in blood on the wall.
Flashback to Five Years Earlier
Patrick is on a talk show conducting a John Edwards-like psychic reading for an audience member. When he finishes the reading, the hosts of the show inquire about Patrick's involvement in assisting police with their investigation of the serial killer known as Red John.
Back to Present Day
The investigator and the team are now in the bedroom with Patrick. The investigator continues to elaborate on his theory when Patrick states that the murders were not the work of Red John. Patrick says that Red John is a showman with a strong sense of fear, so he makes sure the first thing anyone sees is the smiley face on the wall. He goes on to say that once people see the smiley face, they begin to feel dread because they know what's happened. Then and only then will the people see the victim. Patrick says the layout of the crime scene is reversed, where the victim was found first and then the smiley face.
Back at the sheriff's department, Teresa tells the team that Patrick was right and that the evidence doesn't fit the Red John pattern. She then calls Patrick on her cell phone and asks him to come back and help with the investigation. He was already in the police station when she called and he enters the office. He introduces himself to Van Pelt as he grabs a cup of coffee and she lets him choose a desk to work at.
Agents Kimball Cho and Wayne Rigsby go to visit Price Randolph at his home and question him on his whereabouts during the time of the murders. He informs them that he was getting a 'massage' but can't remember the name of the parlor. Patrick and Teresa go to see Wagner and ask for his help with some questions about Alison Randolph. Out of the blue Patrick asks if Dr. Tannen kept a diary, because that helped them in a previous case, but Wagner tells him no. Wagner informs them that Alison asked him for a year's supply of birth control pills off the books. Teresa inquires why there was a need for secrecy and Wagner tells them that Price had a vasectomy in April of 2002. Just before leaving, Patrick asks Wagner if he can get some sleeping pills. Wagner tells him that they'll need to setup an appointment before he would write a prescription and Patrick tells him that he might call him later.
That evening, the team discusses the case over dinner and was examining possible suspects. Patrick told the team that if they looked at Price Randolph's PGA career, he only came in second and third. He goes on to explain that Price is a choker when the game's on the line and that he didn't have the nerve to kill his wife. The topic of the conversation shifts when Van Pelt inquires about Patrick's career as a psychic and a debate begins on whether real psychics exist or not. Van Pelt believes that they do exist and Patrick attempts to rationalize to her that there aren't real psychics and that there is no life after death.
After dinner, Patrick is watching TV in his hotel room when he hears someone slide an envelope under his door. He opens the envelope and finds a note signed with a red smiley face. He rushes out of his room to catch a glimpse of someone running down the hall and into the stairwell. He chases after the person, but stumbles down some of the stairs. When he makes it out of the hotel to the street, he looks around but sees no one.
The team meets in Patrick's room to examine the note slid under the door. Patrick tells them that even though the note sounds like Red John, it's not from him. Teresa asks Cho to check where Price Randolph was, Rigsby to check the hotel security cameras and Van Pelt to get the envelope and note over to forensics. She tells Patrick to get some sleep. After everyone's gone, Patrick leaves the room to sit in a coffee shop and is there all night writing in a red diary. The following morning, the team finds him at the police station sitting at his desk writing in the diary. Teresa knows he hasn't slept and calls Wagner's office to make an appointment for Patrick. Rigsby comes over and says that forensics found a hair in the envelope and that the DNA matches Tag Randolph, Price's brother. They bring Tag in for questioning and learn that Tag and Alison were lovers. Patrick goes to meet Wagner for his appointment and is asked what keeps him awake.
Flashback to Five Years Earlier
Patrick discusses his involvement in the Red John case with the hosts of the talk show. He tells them that the police asked him to get a psychic fix on who Red John was. He explains that he thought Red John was an ugly, tormented little man who was lonely and sad. Patrick drives home later that night and enters his home. He goes upstairs and begins walking down the hall. As he approaches the bedroom door, he sees a note taped to it. The note is from Red John saying that he was upset about what Patrick said on TV and that if Patrick were a real psychic, he wouldn't need to open the door to know what's happened to his wife and child. Patrick opens the door and the first thing he sees is the smiley face drawn in blood on the wall.
Back to Present Day
Wagner is still asking him what keeps him awake at night. Patrick tells Wagner a story about how his brother died when he was younger. Wagner tells him that the story sounded exactly like what happened to Johnny Cash.
After Price found out the police brought Tag in for questioning, he arrives at the police station only to find out that Tag was having an affair with his wife, Alison. Back at Wagner's office, their session concludes and Patrick gets a prescription from Wagner. As Patrick leaves, he mentions that they still haven't found Tannen's diary even though Wagner agreed that he kept one. Wagner looks surprised and said that he never said that Tannen kept a diary. Patrick says he remembers someone saying that so he was going to have officers come by again the next morning to look again for the diary.
After Patrick leaves, Wagner tears apart Tannen's office looking for the diary. Suddenly Patrick appears in the office and says that he forgot his cell phone in Wagner's office. Wagner tells him that he was curious, so he started looking for the diary himself. Patrick offers to help look for the diary and eventually pulls a red diary out from under a bookcase. He thanks Wagner and they go back to Wagner's office for Patrick's phone. Patrick grabs his phone, drops it in his front pocket and prepares to leave. Wagner pulls a gun on him and tells him to hand over the diary. He skims through it and realizes it's a fake. They begin to talk and Wagner confesses that he committed the murders and slid the note under Patrick's door. He explains that Tannen confronted him about embezzling money. Wagner said that he did it to help 3,000 unfortunate children in Africa and that Tannen was going to ruin everything, so he killed him. He said that Alison was killed to distract police from the real motive. Patrick runs out of the office and goes downstairs with Wagner shooting and following right behind. Patrick reaches the building's entrance where Rigsby is waiting to capture Wagner.
Back at the police station, Patrick enters with a box of donuts and the team gives him the cold shoulder because they realized he knew Wagner did it days ago and all of his actions were part of his plan to set Wagner up and capture him. Patrick walks over to Teresa's desk and apologizes. She says that she is still angry with him. He places an origami paper frog on her desk and walks away. Teresa is dumbfounded that he could think a paper frog would make everything better. The frog suddenly jumps up into the air and pleasantly surprises her. Teresa sits in her chair smiling at the frog as Patrick watches and smiles by the door. That night Patrick returns to his home, walks upstairs and enters the bedroom where his family was murdered. He sits down on a mattress on the floor for a moment and then lies down. The blood is dried and slightly faded, but above the mattress on the wall still remains Red John's smiley face.