After killing the man trying to escape, Michelle orders the other guests to stay calm. A SWAT team surrounds the place and makes everyone alarmed. Michelle is forced to fire her gun into the air to keep the panicked people in line. She says over the hotel intercom that an infectious substance has been released into the building. Anyone attempting to leave will be stopped. The guests file back to their rooms. The dead man's wife lashes out at Michelle.
Jack doesn't have an answer when President Palmer questions why the terrorist used Jack to get in touch with him. Jack has Chase call CTU for a physical description from Alvers. They should cross-check that description against Jack's personnel files.
Palmer tells Wayne that they have no choice but to give in to the terrorist's demands because he will kill most people in America.
Phillips asks Michelle if everyone in the hotel will die. She thinks that some of them are immune to the virus because not everyone was afflicted. Tony calls Michelle, and she is upset that she had to shoot a man who tried to escape. Tony assures her that she did what was necessary. He wants her to have Alvers give a description of the man who hired him.
As Dr. Duncan arrives at the hotel with her Hazmat-suited NHS team, Michelle grills Alvers. He claims that he doesn't know his employer's name, but he met the man at a Go parlor in Chinatown. Alvers describes the man and Michelle feeds the information to CTU. Chloe looks it up against Jack's records and sends the matching headshots to Michelle's laptop. Alvers doesn't spot the man among the photographs. Jack, who has been listening in, has them widen the search to include those who are listed as dead. Alvers reviews the new set of headshots, but this time he recognizes one as his boss. Jack knows who it is. Stephen Saunders was a British agent loaned to CTU from MI-6 for the operation that brought down Victor Drazen in Kosovo. Jack had thought Saunders did not survive the mission.
Palmer and Wayne discuss how to keep the virus threat from the press. Palmer advises his brother to not use the term "Cordilla virus" when drafting releases to not arouse fear. The President meets with his Homeland Security Chief, Joseph O'Laughlin, who suggests that the threat level be raised to red and that airports and highways be closed. Wayne is worried that this will cause even more panic. Palmer orders O'Laughlin to alert the airlines of a possible nationwide grounding.
Palmer is interrupted when Saunders calls and demands that the Secret Service pick up a package from a mailbox across the street within ten minutes. Before Palmer can say anything more, Saunders hangs up.
As they drive toward CTU, Jack discusses his theories about Saunders with Chase. Jack thinks Saunders might have been captured and has spent the last ten years in a foreign prison. Jack calls a friend of his at MI-6, Trevor Tomlinson. Tomlinson, who has already been briefed on the situation by CTU, pulled up Saunders's contacts. The only person not confirmed dead is a woman named Diana White who ran a high-end escort service. She lived with Saunders and passed intelligence to him. Diana lives in Los Angeles.
Dr. Duncan prepares to run a nasal swab test on all the people in the hotel, and she begins with Michelle. The results will be available in two hours.
Secret Service Agent Pierce brings the package from the mailbox to Palmer. Inside it is a cell phone that contains a sub-channel chip which causes the signals to be untraceable. Suddenly, the cell phone rings. Saunders is on the other end. He instructs the President to call a press conference within the next half hour on any subject. Palmer must use the phrase "the sky is falling" during the briefing. Wayne is resistant to sending out this signal, whatever it means. Palmer, however, knows that millions might be killed if he doesn't oblige. He has his staff hastily arrange a press conference.
Chase pulls up information on Diana White. Her clients are very rich and very powerful. Saunders has probably blackmailed these men to raise money to fund his operation. Jack thinks Saunders was captured and tortured, and he now holds the United States government and Jack responsible.
Tony frantically makes calls to NHS to find out if there are any possible cures for the virus. He tells Kim that NHS says there is a mortality rate, and that he feels bad that he and Michelle had been fighting before she left for the hotel. They are interrupted by Chappelle, who asks to speak to Tony privately. Chappelle accuses Tony of putting his emotions for Michelle ahead of his work. He advises Tony to assume the worst, and then turn his focus to getting revenge for Michelle. Chappelle wants him to track bank accounts from Amador's computer to find a link to Saunders.
Jack and Chase break into Diana White's house. Diana hears them, and she fires at Jack. He says he wants to speak to her about Saunders. Jack puts his gun down. Diana approaches him with her weapon raised, but Chase knocks her down. Diana tells Jack that Saunders left her and she hasn't seen him. When Diana asks for her lawyer, Jack says that she is being taken to MI-6, an agency of foreign government, which means her constitutional rights don't apply.
Michelle asks Dr. Duncan if she can speak to Gael in his isolation. He has deteriorated quickly. Dr. Duncan advises against it, but Michelle goes anyway. She is shocked to see the boils on his face and his bloodstained shirt. Gael asks Michelle to contact his family. She offers him her gun to end his own life, but Gael refuses. He feels guilty because, when he was trying to stop the cylinder from exploding, he hesitated out of fear. If he hadn't hesitated, he could have saved himself and the others. Michelle walks away, visibly upset.
As they approach the press room, Wayne tells the President that the FBI is ready to move if the phrase "the sky is falling" triggers any suspicious activity. The FAA is also prepared to ground planes if necessary. Palmer steps up to the podium before the throng of reporters. He announces that the threat level has been elevated to red and that the airports will be closed. Palmer also says the phrase given by Saunders. The reporters shoot out questions, but Palmer is vague in answering.
Jack and Chase enter MI-6 with Diana. Tomlinson says that Diana is the registered owner of the address in Chinatown where Saunders was last seen. Suddenly, a helicopter rises to the window of the MI-6 office and men with machine guns begin firing. Diana is killed. Tomlinson is also hit, and he manages to tell Jack the number of the server where the Saunders files are stored.
Jack and Chase run downstairs, killing two gunmen as they flee. They come upon four dead bodies in the computer room. Jack finds a bomb attached to the computer mainframe. He pulls the hard drive out, and he and Chase run just as the bomb explodes.
Michelle calls Tony with news that Gael has died. She wants to make available to the infected hotel guests the suicide capsules that are used for agents who have been captured. Tony can not authorize this, but Michelle has witnessed what the virus is capable of. "I'll see what I can do," Tony sighs.
Jack calls Chappelle to let him know that the MI-6 office was decimated, but he managed to save the hard drive that was sorting information on Saunders. Jack will bring it in.
Chappelle goes downstairs and sees Tony grabbing suicide capsules from the cabinet. Although it goes against agency regulations, Chappelle allows him to take it to the hotel.
One of Saunders's henchman reports that Jack escaped the MI-6 raid, but that the hard drive was destroyed. Saunders is mildly saddened that Diana was killed even though he ordered her death. The henchman also says that there have been inquiries from Chappelle at CTU into their Cayman bank accounts.
Wayne briefs the President on the MI-6 attack. Palmer is worried that what he said in the press conference could have triggered it. Saunders calls Palmer on the secret cell phone. He wants Chappelle killed. His body is to be delivered to the downtown train yard by 7:00. Palmer refuses, and Saunders tells him that what is going on at the Chandler Hotel will happen at hundreds of locations around the country if he does not comply.