Number Six is administered a sedative and medical technicians enter his flat and hook him up to a device. The Doctor in charge is watching from the observation room and a nervous Night Supervisor wonders if he has authorisation. The Doctor dismisses his concerns, insisting they need to get the information out of their prisoner. The device puts Number Six into a trance and he wakes up. The Doctor makes a drugged prisoner, Dutton, call Number Six and ask him for a report on a security leak. Number Six resists the device and refuses to answer. Number Six starts to crack under the strain and the new Number Two arrives in the observation room and orders the technicians to stop. She warns the Doctor that Number Six would have broken rather than tell them what they want, and she doesn't want him broken.
The next morning, Number Six wakes up and talks with Number Two over the phone while she monitors him. She then talks to her superiors, telling them that they're preparing for the upcoming celebrations. Number Six's new maid arrives with breakfast, dressed as Marie Antoinette. She explains that it's a costume for Carnival. She leaves and a messenger arrives with his invitation. As Number Six picks up a black cat and watches the villagers, Number Two visits and discusses the yearly event, and asks if he's going. She suggests he get a date and points out several attractive women. Instead he approaches a lone woman but Number Two advises against it, saying she's an Observer. Number Six ignores her and approaches the Observer, who nervously tries to leave. He suggests she stay just because Number Two wants her to go. She leaves and Number Six follows her to the Town Hall. She passes through an archway and Number Six discovers a force field is blocking his path. A villager notes only those with permission are allowed inside except for special occasions.
The Observer talks to the Day Observer in the observation room and says Number Six followed her on his own. Meanwhile, Number Six returns to his flat with the black cat and the maid returns and comments that pets aren't allowed. He says the rules don't apply to him and starts to ask questions of her. She leaves and the irritable Number Six prepares for the night, ignoring the night maid's drink. The lights go off by remote, thanks to the Observer who is watching him. The Doctor talks with Number Two and wonders if she'll report him for almost damaging Number Six. When she assures him that she won't (this time), he asks about Dutton.
Number Six refuses to go to sleep and paces nervously about his flat. He tries to go out the door but finds it locked, then goes out the window. The Observer notifies Number Two who is unconcerned. She watches him run to the beach and has the observers release a guardian sphere. Number Six starts running and it paces him until he collapses from exhaustion.
When Number Six wakes up the next morning, he spots a corpse down on the beach. Examining it, he finds a wallet and a radio. He keeps both and goes to his flat. As he does, Carnival is announced for that evening. At his flat he finds his costume: his personal tuxedo from his old life. As he tunes in the radio, Number Two and the Doctor monitor him. The Doctor warns against allowing Number Six to break the rules but Number Two is prepared to handle him carefully. The Doctor reports that Dutton is proving difficult and extreme measures are necessary.
Number Six goes to the beach and tries to tune in a station on the radio. He picks up a speech about freedom but no useful information. Number Two and the Observer arrive and notice the radio. Number Six, knowing they've been monitoring him, makes no attempt to hide it. Number Two warns him that they can only indulge him for a limited time and he now has his own Observer. After Number Two leaves, the Observer berates him for not sharing in the values of the other villagers. Unimpressed, Number Six asks her about Number One and she leaves. Number Six takes a rope and life saver and then goes through the woods to the beach. He spots a nearby cave and goes inside, where he writes out an SOS message and puts it in the wallet. The Observer is unable to locate him but Number Two isn't worried. The Observer receives word that one of her other observees died recently and is clearly upset at the news.
Number Six puts the wallet in the corpse's pocket and then floats it out to sea on the life saver. Dutton approaches him and thinks Number Six murdered the man. They know each other from the real world but Dutton trusts no one after the two months he's been in the Village. Number Six explains himself and they talk. Dutton warns that he's already been interrogated but they don't believe his claims of ignorance. He's been given 72 hours to rest but after the next interrogation he'll be killed.
That evening, Number Six dons his tuxedo and goes down to the beach. Number Two, dressed as Peter Pan, goes to fetch him to the Carnival. They enter Town Hall through the previously guarded archway. The Villagers are all assembled for this rare occasion and begin to dance. With some prodding from Number Two, Number Six dances with the Observer (dressed as Little Bo Peep). He still refuses to take the situation seriously and the Observer warns that he could receive "treatment" if he doesn't cooperate. Once the dance is done, he slips away and dons a lab coat and glasses as a disguise. He encounters a female technician emerging from a chamber with a termination order. He offers to deliver it and she accepts. He opens it and finds that it bears Dutton's name.
Number Six finds a file room and beyond that a morgue. Inside one of the drawers he finds the dead man from the beach. Number Two comes in, accompanied by the black cat which she says works for her. She informs Number Six that they have "amended" the corpse to resemble him and the note to show that he died at sea.
Returning to the Carnival, Number Two tells Number Six that he's the entertainment for the evening: as the defendant in a trial. The Observer will serve as his prosecutor and Number Two will act as his defence attorney. The Town Crier, the Maid, and the Doctor will serve as a panel of three judges. The Observer charges Number Six with possessing an illegal radio and presents the testimony. Number Six, amused, watches as Number Two testifies against him and the Observer calls for the death penalty. Number Two asks for clemency, pointing out that Number Six is new and should receive sympathy. The judges congratulate her on her defence and consider the matter, but Number Six asks to present a character witness: Dutton. Number Two agrees and Dutton is brought forth... his mind destroyed and dressed in a jester's costume.
The judges proclaim Number Six guilty and the Observer tries to intervene. Number Two warns her there's nothing to be done. Number Six walks through the crowd, which chases after him. He runs to the morgue and escapes through a hatch in the floor. He goes underground to the hallway and finds a study with a teletype machine behind a silk screen. He rips out the machine's wiring and then sees the Villagers through a one-way mirror, milling about outside. Number Two enters with the Observer and tells him that the villagers lack his initiative and will never see the room. He is now dead as far as the outside world is concerned. She tells him that the Observer has been assigned to other duties, having grown too close to him. The teletype comes back to life again and Number Two laughs in triumph.