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.

Lt. Daniels puts his team together but the extra help he's asked includes several less than stellar officers. It also includes McNulty, who is obviously in the doghouse. When one of the witnesses against D'Angelo Barksdale is found dead, McNulty and his homicide partner 'Bunk' Moreland bring him in for questioning. They have no evidence that he had anything to do with the killing but their instincts tell them otherwise. When news of the witnesses death hits the press, Major Rawls is convinced that McNulty is again responsible. Three of the newly assigned detectives, Hec, Prez and Carver decide to go to the towers and flex a little muscle only to have it turn into a major disaster.

After two weeks on the job, the team still doesn't have a photo of their principal target, Avon Barksdale. Freamon has a solution when he hears Avon was a Gold Gloves boxer. In the aftermath of the near riot at the towers, Lt. Daniels stands by his men even though he thinks they were stupid to do what they did. He's ordered to lead a raid on the low-rise units in the projects but McNulty rebels and refuses to participate in a raid that's just being put up for show. Dissatisfied with the antiquated equipment they have to work with, McNulty asks his friend at the FBI to lend them listening devices. His friend also has some information for him about Lt. Daniels. D'Angelo isn't around when a gang led by someone called Omar robs his stash.

Bodie walks out of detention pretending to be a janitor but Patty is recovering in hospital and is pleased that his injuries will result in a medical pension. Avon Barksdale puts a contract out on Omar and others who robbed him. He wants to make sure everyone on the street knows he's not to be messed with. Judge Phelan keeps the pressure on and Daniels recommends to the Deputy that they need a wire. McNulty suggests they get a warrant to clone the pagers the drug runners use. Det. Fremon is one step ahead of everyone having already found D'Angelo Barksdale's pager number.

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.

Avon takes care of Omar's man Brandon but Wallace, who saw Brandon in the arcade, isn't too comfortable when he sees what they've done to him. Avon gives D'Angelo and Wallace a bonus for their good work. The police meanwhile get authorization to place taps for the pay phones used by D'Angelo and his crew but can only listen in when one of their suspects is using it meaning they'll have to keep the phones under constant observation. McNulty is in a tight spot when Major Rawls gives him a week to report back to his old job. When he realizes the connections McNulty's made in the various shootings, he announces he's going to arrest the Barksdales for murder and threatens to mess up the drug investigation.

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.