The episode opens in Gus's mom's car, where Gus is complaining about his love life; he's having trouble sleeping, and when he does, he has nightmares. Shawn pulls over to get gas down the street from a zombie fun run, and while he's inside, Gus sees Curt Smith from Tears for Fears pull up to the pump across the way.
Moments later, Smith is swarmed by zombies and torn away from his conversation with Gus. One heads toward him, but he rolls up the car window, severing the zombie's fingers. After a moment, they all swarm the car while Gus screams and cries -- even Curt Smith is a zombie now, and he cracks the windshield.
When Gus wakes up, he's in a hospital gown and being treated in dream therapy with sensors on his temples. The doctor next to him introduces himself as Dr. Simpson, and tells Gus that he got a lot of useful data out of his dreams. He keeps smacking Gus in the face with a giant flyswatter, which he says is "just part of the process," and then he asks Gus to tell him all about his nightmares.
He asks Gus to explain what the dream represents to him; Gus says it's about his love life, but Simpson tells him that it's really about Shawn; that he needs Shawn to feel whole. He reads a bit from his new book to prove his argument, and then sends Gus away.
Gus finds himself in the Psych office, where a door is bumping. He opens it and sees Shawn there, telling Shawn that his dream is all about Emmanuelle, the girl who left him. A potential client comes in, asking for help finding out whether his wife is having an affair and despite the fact that he's strapped for cash, Gus wants to hear him out. he takes Shawn and Gus in his van to to install cable for the man's job, before staking out his wife and find out what's going on. They arrive at an old, abandoned house, where Shawn gets out to use the bathroom at the cable appointment. Gus sees a zombie in the car's rear view mirror -- then a creepy man with an odd oice approaches his window. Gus runs inside the house and finds himself watching a bizarre TV show and then being accosted by sounds. He's lookign for the client (Zach) or Shawn, neither of whom are anywhere to be found. The house's kitchen is disgusting, with rotting food and flies everywhere. Gus looks outside to see the creepy man running at him on all fours, and then he's approached by a Leatherface-looking assailant who drags him away.
Gus snaps awake in Simpson's office, where he admits that Shawn abandoned him again. Simpson tells him that he isn't worried Shawn is going to leave; he's afraid that working with Shawn is going to get him killed. He once again starts reading to Gus from his book. He tells him that when people are in a perpetual state of panic, there are no mental resources to do anything else.
At the SBPD office, Shawn approaches Gus as he's trying to call Emmanuelle and hangs up his phone, telling him that the ball is clearly already in her court and he shouldn't harass her anymore. He doesn't trust Dr. Simpson and wants to follow Gus to his next appointment. Betsy greets them, and they approach Lassiter, telling him that they're looking for work. Lassiter excuses himself.
They approach Zach's wife, who is a teacher; they pose as a gay couple and ask her questions about their son; she works at a school and is clearly attracted to Coach Bagg, who works with her. They ask to talk to him and he invites them to meet with him an hour later in the gym. When they arrive, it's dark there and the only person around is a janitor. The pair join him in his office, where Shawn sees a Post-It in Zach's wife's handwriting. Bagg is a former athlete who drank himself out of professional football and now spends too much time at the casinos.
The duo go to leave but find themselves confronted by a creepy janitor and head in the oppsoite direction. They end up in a basement surrounded by decrepit old school supplies, hearing children laughing; a ball rolls toward them, then away on its own. Shawn runs away, but Gus can't move until it's too late and the pair are separated. Everywhere Gus goes, balls are falling out at him while Shawn directs him from out of sight. Gus eventually comes to a dead end where he's approached by a group of creepy children. Two of them turn into teenagers, then vampires, and all the kids laugh at Gus until he backs up into a giant spider web and they all pelt him with dodge balls while he shrinks to spider-size.
Back in Simpson's office, Gus is now joined by Shawn, who is sitting with Simpson and listening to Gus's therapy session. Gus admits that he feels like he can't trust Shawn anymore, and that he feels abandoned. Shawn comes to the realization that Zach's wife wasn't cheating; she was teaching the coach how to read. Before he can do anything about it, though, he gets a phone call that tells him Coach Bagg has been beaten to death. There's a handful of threatening letters connecting Zach to the killer, but Shawn and Gus aim to prove he didn't do it.
His wife doesn't seem that interested in him, and compliments him backhandedly, intimating that he might be having a mid-life crisis and then not returning his "I love you" as he's taken to a holding cell.
Shawn and Gus head to the morgue, where Woody is standing, smoking a pipe, next to a silver skeleton. He asks if it seems too "mid-life-crisis-y," and tells them he loves them when they say no. Bagg has been severely beaten, with numerous breaks and lacerations all over his body, including his knees, jaw and more. Woody says he was probably bound and gagged first. Woody tells them that his fingers had been broken a couple of days before the killing, which stick out at Shawn because Bagg had told him his fingers were an old lacrosse injury.
While Woody is talking about Bagg, he reanimates, drags Woody down to his level and starts to attack him. Shawn and Gus run away, only to find a zombie version of McNab in the hallway. Gus runs, then wakes up at his parents' house. On an endtable instead of his father's picture is a photograph of what appears to be Martin Sheen. He follows noises to the kitchen, where his mother is doing dishes. Shawn left to drive his dad home; Gus's mom asks for help putting away the dishes, and he hugs her. He's so relieved to be home, safe, and to have no horrible situation play out after Shawn leaves. He admits that Emmanuelle bailed on him. He admits that his whole life is changing, and he's having panic attacks. he doens't know how he fits in with Shawn probably leaving since Henry and Juliet are gone. He doesn't have a job and he doesn't know where he stands.
His mom gives him a bunch of generic advice, which eventually deteriorates into nonsense. Moments later, the sink starts to make noise and a monster comes up out of the drain and eats Gus's mother. He runs away screaming, only to find himself in a black and white room where Lassiter and Betsy are fighting zombies, nailing up windows while Henry helps. In spite of the boards, zombies reach through and pull Lassiter out, splattering his blood all over Betsy. the zombie that kills him is Curt Smith, who Betsy shoots. She's carried away by zombies while us cries in a corner. Henry saves him and the two run away, hiding in a closet. Henry lights a match, only to reveal a zombie hiding in there with them. Gus runs out into the lobby, now full of zombies, and goes to swing a three-hole punch (the first thing he saw) at one of them; all the zombies start to laugh at him and he runs away again, hiding in the bathroom. there he finds Shawn, also a zombie, who grabs Gus by the head and tries to eat his brains.
Gus wakes up -- now in the car at the gas pump again. Shawn has brought them sodas, and Gus says he just had a nightmare version of their whole week. Shawn has solved the case of Coach Bagg's murder. He tells Gus that Bagg was gambling and that his fingers had been broken because he didn't pay his debts; one of the men they'd seen at the school was a bookie's muscle; Shawn figures he came back and finished the job a couple of days later.
Gus is fast asleep while Shawn explains this.
When Shawn and Gus arrive at the police department to tell them he's solved the case, but Brannigan has already done it. Zach is reunited with his wife, and Gus tells Shawn that he has to reunite with his girl, too. Of course, then he calls Shawn by her name and slaps his ass.
At a book signing for Dr. Simpson, he's saddened to find out there was no promotion. Gus approaches his table to get his copy of the book signed, telling him that he's been sleeping like a baby. While the two are talking, Shawn leaves to go use the bathroom, and Gus reads the inscription: "Burton: See you in your dreams," followed by an evil laugh. When Gus turns around to look at Dr. Simpson, Simpson says "Come get some," and then an Evil Dead-style Deadite comes out and makes faces at Gus.
Gus wakes up and calls Shawn; the two meet at the Psych office to share massive milk shakes and watch Real Genius. Val Kilmer is still the king, they agree.
"Hail to the king, baby," Shawn says. The camera swings around behind the pair, and they both turn around to laugh and stare into it with Deadite eyes.