Baltimore Det. Jimmy McNulty finds himself in hot water with his superior Major William Rawls after a drug dealer, D'Angelo Barksdale who is charged with three murders, is acquitted. McNulty knows the judge in question and although it's not his case, he's called into chambers to explain what happened. Obviously key witnesses recanted their police statements on the stand but McNulty doesn't underplay Barksdale's role in at least 7 other murders. When the judge's raises his concerns at the senior levels of the police department, they have a new investigation on their hands. Lt. Cedric Daniels is put in charge with Kima Greggs as the lead detective. As for Barksdale, he finds himself demoted to a low-level dealer after his arrest and he obviously has to prove himself yet again.

Avon Barksdale is becoming paranoid and thinks he's being watched. He's also worried his phone is being tapped. He also thinks there's a snitch in D'Angelo's crew and he's told not to pay anyone until it's sorted. D'Angelo isn't too pleased when he hears Avon has given Stinkum a new territory. Judge Phelan visits the squad to sign the warrants to clone D'Angelo Barksdale's pager. The numbers they're collecting are coded and don't make much sense. Det. Prez Pryzbylewski figures it out however. McNulty and Greggs try to get information from Omar.

Burrell reluctantly sides with Daniels in the disagreement with Rawls, giving the detail more time to make a case against Avon, despite his fears the operation is beginning to sprawl. McNulty and Pearlman present the detail's findings to Phelan, who signs an affidavit for a further thirty days of electronic surveillance. Using information from the wire on the pit pay-phones, the detail catch a runner on his way to the pit with a re-up. However, they elect not to arrest the driver, Anton 'Stinkum' Artis (Brandon Price), so as to avoid giving up their evidence in the charging documents. Stinkum's apparent free pass from the police convinces Avon and Stringer that their operation has been compromised, and Stringer introduces a new set of operating procedures. Rawls gives Det. Michael Santangelo (Michael Salconi) a choice; acquire information that he can use against McNulty or solve some of the department's open homicides, whilst the owner of Avon's strip club, Wendell 'Orlando' Blocker (Clayton LeBouef), has a proposal for D'Angelo. Meanwhile, Bubbles and Johnny attend an NA meeting, and Bubbles is moved by a speech given by recovering addict Walon (Steve Earle). Investigating the murder of the witness in D'Angelo's trial, with some help from Omar, the detail target Barksdale hitman Marquis 'Bird' Hilton (Fredro Starr).

McNulty uses his children to tail Stringer after a chance encounter in a local market, with one of them getting his license plate. As the detail discuss the implications of the pit pay-phones being disconnected, speculating the crew are going to start using phones outside their immediate area of operations, Herc and Carver prepare for the sergeant's exam. Stinkum, Roland 'Wee-Bey' Brice (Hassan Johnson), and Savino Bratton (Chris Clanton) raid Omar's pad, but he is nowhere to be found. Avon is unhappy when he learns of Orlando's proposal to D'Angelo. Meanwhile, Greggs and Carver arrest a driver picking up a large amount of cash from the towers, but are surprised to learn he is an aide to State Senator Clay Davis (Isiah Whitlock Jr.). Burrell is furious with this turn of events and confronts Daniels about the direction in which the case is heading, giving him one week to charge Avon and/or Stringer. Phelan, however, tells Burrell he wants the full thirty days of surveillance assigned by the court. As Wee-Bey and Stinkum attempt to take over new territory, they encounter an unanticipated problem.

D'Angelo speaks to Wallace, who tells him he wants to go back to school and get out of the Game. However, Malik 'Poot' Carr (Tray Chaney) discovers Wallace has started using cocaine to help him deal with his guilt over Brandon's murder. Freamon gets Sydnor and Prez started on the complex Barksdale money trail, including possible political connections, and they are surprised to find Avon's corporations have been buying up vacant buildings in run-down parts of the city. Greggs and Freamon approach D'Angelo's girlfriend, Shardene Ennis (Wendy Grantham), who works at Orlando's, in the hopes they can turn her into a CI. After Bubbles narrowly avoids a beating whilst stealing a package that turns out to be stepped on, he decides to try to get clean. Avon and Eastside kingpin 'Proposition' Joe Stewart (Robert F. Chew) stage the annual East vs. West basketball game, but when the detail follows Avon afterwards, they get something they never expected. Meanwhile, having already killed Stinkum, Omar sets in motion a plan to gain revenge on Avon for Brandon's death.

Avon, Stringer and Wee-Bey discuss how best to deal with Omar after the attempted hit on Avon, deciding to let him think they want peace, whilst secretly planning to kill him. As such, Omar and Stringer meet for a parley, with security provided by Prop Joe. Meanwhile, Stringer insists on decreasing Avon's visibility in light of the detail's attempt to follow him after the basketball game. An irritable Phelan signs an affidavit for the new phone being used by the pit crew, and Pearlman tells McNulty that he is not up for automatic re-election, possibly because of the feathers he has ruffled due to his involvement with the Barksdale case. D'Angelo tries to understand why Shardene has left him, and after being clean for three days, Bubbles gets some advice from Waylon, before turning to Greggs for support. Meanwhile, McNulty attempts to flip Wallace, and the detail identifies Barksdale's main stash house. However, when Orlando's attempt to purchase weight gets him a lot more than he bargained for, Burrell sees an opportunity for a dangerous undercover operation.

While Greggs' life hangs in the balance, the entire department attempts to hunt down Savino. When Wallace flips, willing to testify that Stringer, Wee-Bey and Bird killed Brandon, Daniels stashes him in his grandmother's house on the outskirts of the city, but he soon becomes restless. Stringer tells Wee-Bey he needs to get out of Baltimore until the Savino investigation cools off, while Avon considers his next move. When McNulty and Pearlman try to pressure Levy into giving up Savino, he proves smarter than they gave him credit for. Meanwhile, when the detail's hand is forced, and a series of city-wide raids are ordered so as to appease Burrell's desire for "dope on the table," McNulty goes to see Phelan for help, but is surprised at his reaction. Daniels decides not to raid the main Barksdale stash house, but when word of his plan gets back to Burrell, he realizes there is a snitch in the detail. Elsewhere, Bubbles finds it increasingly difficult to stay clean.