One morning in San Francisco, an amazing thing happens. The Frisco Fly, a masked daredevil who climbs the city's buildings while avoiding the police, falls during one of his stunts. Onlookers rush over to the fallen Fly, who turns out to be Monk's bitter rival, and fellow patient of Dr. Kroger's, Harold Krenshaw. Miraculously, Harold survived the accident, and is rushed to the hospital.
Meanwhile, Monk is with Capt. Stottlemeyer on a secluded stretch of road investigating a burned out car wreck. There's a dead man behind the wheel, and every piece of identifying information has been removed from the victim and his car. It looks like vehicular homicide, but Monk thinks the victim's death was accidental, and that someone who happened upon the scene set the car on fire sometime after the victim's death. But why would someone do such a thing?
Monk is soon confronted with an even more baffling question when he hears the news about Harold Krenshaw. How can Harold, who has more fears and phobias than Monk, be the Frisco Fly? Monk goes to the hospital, where Harold is being treated like a hero. Monk can't believe Harold is the Frisco Fly, but Harold insists that he and the great daredevil are one in the same.
Monk sets out to expose Harold as a fraud, but all of the evidence supports Harold's claim. With Harold seemingly over his phobias, Monk goes into a tailspin over his inability to do likewise.
Monk is as low as he's ever been until a break in the investigation of the burned out car provides a glimmer of hope. Lt. Disher is able to identify the victim as a man named Victor Grajna. Grajna was an acrobat, and the contents of Grajna's apartment indicate that he was the real Frisco Fly. Then, Monk notices Natalie scratching at some poison oak she caught at the scene of the burned out car. Monk thinks back to his visit with Harold Krenshaw at the hospital, and remembers seeing one of Harold's visitors, his Cousin Joey, scratching as well. Eureka! Monk has solved the case! Harold is not the Frisco Fly, and his Cousin Joey is trying to kill him.
Everyone rushes to the hospital, but Harold is gone from his room. Monk and Natalie go to the roof, where they find Harold, in full Frisco Fly regalia, being held at gunpoint by his cousin. Monk and Natalie struggle to disarm Cousin Joey and take him into custody, while Harold the “hero” cowers on the sidelines.
Monk explains what happened. Harold and his cousin stood to inherit a large fortune from a wealthy uncle. Cousin Joey didn't want to share the fortune, and decided to kill Harold. Then Joey got lucky. He came upon the car accident, where he found Victor Grajna dead and the Frisco Fly costume in the car's backseat. Joey grabbed the costume and set the car on fire. Then he snuck up on Harold, knocked him unconscious, put him in the Frisco Fly costume, and threw him off the roof. It would appear that Harold was the Frisco Fly, and that he had died accidentally while performing one dangerous stunt too many. Harold was so confused and pleased by all the attention that he decided not to tell anyone what really happened.
With his cousin subdued, a disoriented Harold puts his own life back in jeopardy by mistakenly walking off the roof. This time Harold's parachute opens, and Monk can only sit back and watch as his nemesis, whose life he just saved, drifts off into the sunset while an adoring public cheers from the streets below.