In the Psych office, Shawn and Gus discuss the fact that Chief Trout still hasn't hired them to work on any cases for the SBPD. They entertain the idea of inventing a case, but they know that will never work.
We then cut to a man named Cyrus dragging a dead body at an unknown location. After he thinks someone has spotted him, he panics, drops the body and takes off. Cut to the morgue, where we see the same dead body, a John Doe, lying on the table ready for Woody to perform an autopsy. Cyrus enters the morgue dressed as someone from a mortuary. When Woody won't let him take the body, Cyrus pulls a gun on Woody, barricades the morgue, and holds him hostage. Cyrus tells Woody that the man on the table is named Greer Wilson, a person who he found dead on his living room floor stabbed to death with a knife from his kitchen. He tells Woody that he and Greer shared a cellblock in prison and got into a nasty fight while there. Cyrus' last words to Greer were, "The next time I see your ugly face again, I'm going to kill you!" Cyrus says that he was framed for Greer's murder and that if Woody performs the autopsy, he'll be the SBPD's number one suspect. If so, he risks having to go back to jail.
The SBPD immediately get wind of the hostage situation, and Trout takes control of it. Trout calls Cyrus to negotiate. Trout at first appears like he is going to handle the situation with Cyrus safely, but when he gets off the phone, Trout tells his team that he's going to enter the hostage situation and gun Cyrus down himself.
After Cyrus tells Woody that he doesn't trust the cops, Woody tells Cyrus to hire Shawn and Gus. They relay this info to the SBPD and Trout reluctantly orders Shawn and Gus to be brought onto the case. Trout sends them down to the morgue. Cyrus agrees to let the SBPD send in Woody's anxiety medication. But unbeknownst to Cyrus, Trout has put a tiny camera inside the bottle so that he can have his eyes on the room at all times.
Cyrus lets Shawn and Gus into the morgue and tells them he believes the real murderer could have been someone at the halfway house he was living at. Before Shawn and Gus leave to check out this lead, Cyrus shows them a picture of his wife and tells them he has something to live for and that proving his innocence is paramount. They head out to check the lead, but before they can leave the SBPD, they see that Cyrus' wife is there along with Cyrus' parole officer, Edward Tripp. We learn that Tripp was also Greer's parole officer.
Shawn and Gus arrive at the halfway house in search of leads for Greer's real killer. A man named Rocco greets them and tells them he's running the joint until his boss Maurice gets back. Rocco leads them through the halfway house and tells them that his roommate, Greer Wilson, was just killed. Shawn and Gus put Rocco on their suspect list. Next, they ask to check out Greer's room. While there, they find a picture of Greer and Cyrus' wife acting affectionate. They realize this info doesn't bode well for Cyrus. He now has motive.
Shawn and Gus return to the SBPD to question Rosie about her affair with Greer. She tells them that Greer was in love with her, but she had to break it off because he had started to return to his criminal past, coming in and out at all hours of the night, etc. From this, Shawn thinks Maurice was giving Greer special treatment by letting him stay out past curfew. Shawn presents the theory that Maurice killed Greer because he and Greer were involved in some sort of crime together and Greer wanted out. Shawn and Gus head out to find Maurice for questioning, but when they arrive they find Maurice dead.
Meanwhile, Trout is still hell-bent on solving the hostage situation himself. He suits up in a bulletproof vest, and Juliet starts to worry he might do something reckless that could cost Woody's life. Juliet tries to level with Trout and suggests a safer approach. But he isn't having it. So Juliet takes matters into her own hands. After some convincing, Cyrus allows Woody's daughter to be brought in so he can see her one last time if things go sour. When she enters the room, we realize it's Juliet disguised as Woody's daughter.
Woody plays along and slyly places a photo of himself and his real daughter, who looks nothing like Juliet, facedown so that Cyrus doesn't catch them in the act. Cyrus has started to grow impatient because Shawn and Gus haven't found the real killer yet. Woody offers to perform the autopsy to see if there is any evidence that wouldn't point to Cyrus as being the killer. Cyrus agrees and Woody performs the autopsy with a grossed-out Juliet who is forced to watch because part of her cover is that she's in school studying to be a Coroner.
Shawn and Gus head back to the halfway house and discover a handful of lottery tickets in Greer's stuff. The tickets was purchased after Greer's curfew and from a convenience store outside of his parole perimeter. Shawn and Gus head to the convenient store to search for leads. The clerk isn't able to provide any information, so Shawn and Gus check out the neighborhood surrounding it, wondering if Greer was killed there.
Meanwhile, back at the morgue, Cyrus discovers the picture of Woody and his real daughter and realizes he's been lied to his whole time, and that Juliet is actually a detective. Woody gets Cyrus to calm his anger by telling him that he did in fact find a piece of evidence on Greer that doesn't point to Cyrus being the killer. The evidence is sulfuric acid. Cyrus allows Woody to relay this information to Shawn and Gus.
Shawn and Gus take this info and search the neighborhood for anything that would contain sulfuric acid. A clue leads them to an abandoned building. Before they enter the building Shawn sees a clue that tells him someone has been sneaking in. While in the building, Gus sees stacks of packaged fertilizer and realizes that one of the components in fertilizer is sulfuric acid. Shawn then spots blood on the floor, and concludes that Greer was killed there. But who was the killer? Gus tells Shawn that if someone were to have contact with sulfuric acid, there would be signs of it. Shawn then remembers he saw someone earlier whose hands were blotchy and blistered. Armed with this clue, Shawn tells Gus he knows who the killer is. He quickly pulls out his phone to tell Lassiter the news.
Back at the SBPD, Trout realizes that the camera in the pill bottle has gone dead, so he decides to take matters into his own hands and take down Cyrus himself. Trout and the S.W.A.T team make their way down to the morgue. Just then, Lassiter gets a call from Shawn, who tells him the killer is Cyrus' parole officer Edward Tripp. Shawn then tells Lassie why Tripp did it, and that Tripp is still at the station. Lassie finds Tripp and points a gun at him, threatening to arrest him for the murder of Greer and Maurice.
Simultaneously, in the morgue, Juliet sees a text from Shawn explaining that Cyrus is innocent. Juliet stands in the line of fire to protect Cyrus, and Trout is not happy about. She begs Trout to trust her. He eventually does, and both Cyrus and the police lower their weapons.
Up in the station, Lassiter still has his gun trained on Tripp. He gets a radio call from downstairs saying the stand-off is over. Tripp knows he's done for but he still won't admit he's guilty. Lassiter tells Tripp that he knows what went down. Tripp did it because Greer wanted out of their black market electronics scheme. He knew Cyrus was easy to frame, given the affair and his past with Greer. Tripp tries to deny it, but Lassiter has solid evidence and therefore arrests him on the spot.
The next day, Shawn, Gus, Juliet, and Lassiter are called into Trout's office. He fires them all for not taking his direction and for doing as they please. At that exact moment, Trout gets a phone call from Internal Affairs telling him that he's fired because Trout's tactics to take down the hostage situation exposed the department to unnecessary liabilities. Trout accepts his fate and leaves the SBPD for good, and the gang gets to keep their jobs.