Picard and Riker are joined by Admiral Pressman, who was Riker's first commanding officer, for a secret assignment. Riker is shocked to hear that debris from their ship, the U.S.S. Pegasus, which was lost with most of its crew 12 years ago, has been located in the Devolin system by the Romulans. Pressman explains that the Federation must find it first to prevent sensitive technologies from falling into the wrong hands.
The search begins, and the U.S.S. Enterprise is soon confronted by a Romulan warbird that is obviously on a similar mission. Later, Riker and Pressman discuss what happened to the Pegasus, and Riker is clearly disturbed when Pressman reveals that he wants to find the ship in order to try the secret experiment that caused the disaster 12 years earlier. He tells Riker that the Chief of Starfleet Security is behind the mission, and orders Riker to keep the mission's true nature secret from Picard.
The Enterprise continues to search, and Geordi picks up a resonance signature from an asteroid. It seems to be that of the Pegasus, which has apparently been pulled into one of the asteroid's fissures. At that moment, the Warbird reappears, and Riker suggests they destroy the asteroid rather than let the Romulans find the ship. Pressman objects, and Picard suggests that they blanket the asteroid with ionizing radiation to mask any signals the Pegasus may emit.
The plan works, the Warbird moves off, and Picard orders Data to further divert the Romulans by pretending to continue their search. Afterward, Pressman attacks Riker for suggesting they destroy the Pegasus, and Riker indicates that he is uncomfortable lying to the crew. Pressman sympathizes, but stresses the importance of the mission. Later, Riker meets with Picard, who has learned, with some difficulty, that there was a mutiny aboard the Pegasus just prior to its disappearance. He suspects a Starfleet cover-up, and asks Riker for his version of the story. Riker tells him that the crew mutinied because they felt Pressman was jeopardizing the ship, and that he supported his captain out of duty. But when Picard presses Riker for more information, he refuses to comply. Soon afterward, the Enterprise arrives back at the asteroid, and Pressman orders Picard to take the ship inside the fissure. Picard objects to the risky procedure, but the admiral outranks him, so Picard is forced to carry out the orders.
Inside the asteroid, they find the Pegasus fused into the rock. Riker and Pressman transport to the ship's Engineering section where among the bodies of their former crewmates, Pressman discovers the cylindrical device he was looking for. With difficulty, Riker tells Pressman that he cannot let him conduct another experiment with the device, reminding him that many people died because of it. Pressman defends his experiment, which apparently violates a Federation treaty, and reminds Riker that he is under orders not to reveal what he knows. At that moment, the ship begins to shake violently, and Picard transports the pair back to the Enterprise. There, he shares the grim news — the Romulan ship found them and has sealed the Enterprise inside the asteroid.
Seeing no other choice, Riker suggests that they use Pressman's experiment, the secret prototype for a cloaking device that allows ships to travel through solid matter, to escape. Pressman is furious to have his experiment revealed, but Picard is equally furious that the admiral has violated the Federation treaty against developing this type of technology. But despite its dangers, Picard agrees to use it to escape the asteroid, thus revealing the process to the Romulan ship. Afterwards, he places Pressman under arrest for violating Federation law, and when Riker reminds him that he, too, is guilty, Picard grimly arrests his first officer as well.
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