The Enterprise receives a call from the Sheliak Corporate, which they haven't heard from in 111 years. The Sheliak insist Tau Cygna Five is theirs, due to an old treaty, and they want the humans there gone- despite the fact that, due to hyperonic radiation, the crew doesn't think any humans could possibly be there.

When they reach the system, they find the radiation interferes with the sensors, along with phasers and transporters. Data, as the only crewmember immune to the radiation, is sent down via shuttlecraft to begin evacuation procedures. To everyone's surprise, however, Data finds, not a crashed ship with a few dozen people on it, but a thriving civilization of over 15,000 people, descended from the occupants of a 92-year old lost colony ship. Further, their leader, Gosheven, boasts of the colony's accomplishments, scorns the Sheliak claim, and refuses to leave. While Data meets and befriends Ard'rian McKenzie, a woman very interested in androids, Picard tries to ask the Sheliak for more time.

The Sheliak, unfortunately, are sticklers for the letter of the treaty, and refuse. Data, hearing of the urgency of the situation (three days remain before the Sheliak colony ship arrives), attempts to speak with Gosheven again, with as little success. Then, he and Ard'rian start spreading the word to the people of the colony, as the Enterprise leaves the system to begin looking for the Sheliak vessel.

A few hours later, Data has met with little success. Their words have had the effect, however, of making Gosheven call a public meeting, at which Data tries to evoke images of how they will die at the hands of the Sheliak if they do not leave. Gosheven's rhetoric is too strong, though, and the evacuation still does not begin. Data and Ard'rian meet covertly with several colonists, including Gosheven's two top aides, to try to go behind his back, but Gosheven catches them and stuns Data, saying he's merely "deactivated a faulty machine." Meanwhile, after the Enterprise finds the Sheliak colony ship, Picard and Troi beam over to try to reason with the Sheliak, only to fail utterly.

As Picard decides to study the treaty for possible loopholes, Ard'rian manages to revive Data, who decides to begin using actions instead of words. He uses some of his own circuitry to create a phaser that will work in the radiation, and uses it to make the point that the colonists will, in all probability, never even see the Sheliak before they are killed. Realizing this, the colonists agree to leave. Picard, meanwhile, invokes the treaty's third-party arbitration clause, and names as mediators a race in hibernation for the next six months. To avoid this, the Sheliak agree to give Picard the three weeks he asks for. Upon Data's return, Picard compliments him for his ability to be creative.