As the Enterprise prepares to rendezvous with a Ferengi vessel which has been keeping silent for days, Picard finds himself with a mysterious headache, for which no cause can be found. He allows the Ferengi leader, DaiMon Bok (who seems to know Picard from somewhere) to beam over with his staff.

Suddenly, the sensors detect a Constellation- class vessel approaching, with no call letters. Bok explains that it was a derelict, which he is returning to Picard at no cost. As it nears, they find it's Picard's old ship, the Stargazer. Bok presents it as a gift "to the hero of Maxia." The battle of Maxia, apparently, is the Ferengi name for Picard's fighting off an attack from a then- unidentified ship as his last act before abandoning the Stargazer. Bok's mysterious generosity puzzles even his aides.

Picard explains a bit more about the incident to the bridge crew, including his now legendary "Picard Maneuver," and gets quite caught up in his memories doing so. After the Stargazer is declared safe, Picard beams over. As he goes to his cabin to pick up some things, we see in his chest a pulsing silver sphere. As it glows more strongly, Picard's headache increases in strength.

Later, Data presents some worrying evidence to Riker. Picard's personal log from the Stargazer seems to indicate that he fired on the Ferengi vessel without provocation, and Riker must immediately mention it to Starfleet Command, though he believes (correctly, as Data finds later) it's a forgery. Picard, meanwhile, has a vision of the battle of Maxia.

After analyzing his brainscan, Bev (with a little help from Wesley) determines that the anomalies exactly match low-power transmissions they've been picking up from the Ferengi ship. They report it to Riker, just as Picard, entranced, beams over to the Stargazer, where Bok is waiting for him with a second sphere.

Bok explains that his son led the assault at Maxia, and he blames Picard for his son's death. He hypnotizes Picard into believing he's back aboard the Stargazer, nine years past, and leaves. Meanwhile, Riker calls the Ferengi first officer, Kazago, and shows him the sphere they've found in Picard's quarters. Kazago recoils in shock: it's a "thought-maker," and is forbidden in Ferengi domains. He relieves Bok of command (there was no profit to be made in this personal vengeance) and wishes Riker luck.

As Picard swings around to execute the Picard maneuver, Data tracks him and traps the ship in a tractor beam. Riker gets through to Picard enough to let him destroy the sphere, which frees his mind. Freed, he returns home.