Lucy came to see Katherine after she was invited to come to help her get the Moonstone. Katherine decided to go to the Masquerade Ball disguised as Elena, as she knew Elena wasn't going due to Jenna's accident. She met Caroline earlier that day at the Mystic Grill and told her to tell Stefan and Damon that she wanted the moonstone that night at the Masquerade Ball or she would "rip this town apart until it rained blood."
Before the event, Katherine compelled Matt to fight with Tyler and not to stop until Tyler kills Matt, so he could activate his werewolf gene. Damon, Stefan, Bonnie, Jeremy and Caroline went to the masquerade, while Elena stayed at home with Alaric. His job was to keep Elena safe in the house. Upon arrival, Bonnie put a spell similar to the one used on the tomb on a room to trap Katherine inside.
Katherine came to the ball with everyone thinking she was Elena. She threatened Stefan into dancing with her and when Aimee Bradley came over looking for Matt and complimenting "Elena" on her dress, Katherine killed Aimee by breaking her spine and pushing her body into horrified Stefan's arms. She threatened him by saying "The moonstone, Stefan. Tick tock."
Bonnie had weird vibes about Lucy at the ball and bonded with Jeremy. When Elena learned everyone was at the ball, she snuck out of the house to see what everyone was up to.
The plan started with Stefan and Katherine dancing and Stefan trying to convince her to go with him to get the moonstone. When that failed, Jeremy went to her and told her Damon and Stefan wanted her to meet them by the lake. Katherine was not fooled and mocked him by saying "How's Uncle John? Did they manage to sew his fingers back on?" She walked away and Elena pulled Jeremy behind a bush and asked him what was going on.
Then it was Caroline's turn. She was in the bathroom when Katherine slammed her into the wall and asked why Jeremy was trying to lure her out to the lake. She revealed that Stefan and Damon were trying to kill her. When Katherine began to choke her, she revealed Bonnie that has the moonstone and is upstairs.
Katherine pulled Caroline upstairs with her and entered the trap. Caroline laughed at her from outside and when Katherine tried to attack her, she found that she couldn't leave the room.
Stefan appeared behind Katherine and Caroline left. When Damon shot Katherine in the back with a wooden dart, Elena screamed and collapsed as she had a wound in the same place as Katherine, unbeknownst to the Salvatores. When Stefan got Katherine in the arm, Elena started bleeding there as well. Turns out Katherine had Lucy tie Elena to her so if anything happened to Katherine, it would happen to Elena as well. The brothers almost defeated her, but as Bonnie and Jeremy were with Elena when this happened, Jeremy stopped them from killing Katherine, as Elena would die too. The brothers were shocked at how they were hurting Elena. Katherine knew that everything that happens to her; also happens to Elena. Knowing this, Katherine scrapes her hand with the stake, adding a lot of pressure.Still trapped together, the brothers tried to get Katherine to reveal what she wanted with the moonstone but were unsuccessful.
Lucy then arrived, announcing the spell was broken and that she had the moonstone. She made Katherine promise as soon as she gave it to her, her debt was paid. Katherine agreed but when she touched the moonstone, she collapsed and looked like she was suffocating. Lucy found out Katherine was playing her against Bonnie, another Bennett witch and that she and Bonnie put a spell on the moonstone that would incapacitate Katherine. When Stefan worried that this was hurting Elena, Lucy said she broke the tie between Elena and Katherine and that Elena would be fine. She apologized for her involvement with Katherine and left, leaving Katherine to the mercy of the Salvatore brothers.
In the subplot: Matt was partying with Tyler and Sarah. Matt got drunk and started pouring beer on Tyler's pictures and insulting him and they began to fight. Caroline heard that and came to stop them. She did and she knocked out Matt. Then it is revealed that Sarah was also compelled by Katherine to fight with Tyler until he kills her and when she stabbed Tyler, he shoved her into a desk, instantly killing her. Tyler tried to wake her up and was terrified at what he had done and what it meant. When Caroline asked what was happening, he looked at her with his eyes glowing, indicating he had triggered the werewolf curse upon himself. Caroline then confessed she knew what was going to happen to him.
- This event happened in the Season Two episode Masquerade.
- Katherine wants the moonstone (Stefan and Damon have it.)
- Katherine killed Aimee as a sign that she will get what she wants even if she has to kill people.
- Katherine is trapped in a room with Stefan and Damon, they both try to kill her, but they realize she has a witch on her side, who linked her and Elena together. It mean that whatever happens to Katherine happens to Elena.
- The scene where Katherine has Caroline by the neck, up against the wall, is similar to Vickie in season one, Halloween episode Haunted, where she has Elena up against the wall by her neck.