The episode starts with Stefan's dream — as he imagines Katherine and him dancing at the Founder's Ball, back in 1864, then he sees Damon and Elena together, but Elena is dressed in present day clothes. Then they are going out of the door at the Lockwood Mansion where the party was, following Damon and Elena, evolving into the present day where he watches Damon and Elena kiss at the Grill while playing a game of pool. Then Katherine shows up still in her dress from the party and says that now he knows how she feels. Stefan wakes up in panic, only to find out that Katherine is in bed with him, posing as Elena. She says that she used her powers to get inside his head.

When he asks why she came back, she says that she came back for him. Tyler tries to question his uncle Mason about his shifting into a wolf. He assures Tyler that he's not going to become a werewolf and Richard (Tyler's Father) was not a werewolf, even though the gene runs in their blood. Tyler keeps asking Mason how the curse can get triggered, and according to Mason later in the episode he says that he needs to kill somebody (human blood) and then the curse was his forever.

Back at the Salvatore Boarding house Katherine reveals to Stefan that George Lockwood was the reason for the "round up" of the vampires. Katherine then questioned him why he came back to Mystic Falls, then falsely agrees to what she said that he came back to fall in love with her all over again, and not because of Elena. Acting as if he was still in love with her, and as he is about to kiss her, he stabs a vervain dart in her back and chains her in the cellar to confess the truth of why she came back to Mystic Falls even if he has to torture her to get her to confess. In the next flashback at the Founder's Ball, Katherine says to George Lockwood that he knows her secret (vampire), and she knows his (werewolf). At Jenna's barbecue, that Alaric told her to throw and invite Mason Lockwood — who was a friend of hers during high school, so they can learn more about him, it turns out that Mason knew something about Damon. When Damon teasingly called him "Lone Wolf", Mason shoots back in his own comment "Lady-Killer".

[[File:MemoryLane22.jpg|thumb|right|168px|Stefan and Katherine during the Founder's Ball.]

Once alone in the kitchen Mason confronts Damon and says that he knew what the barbecue was all about, and that he wasn't his enemy. Mason reveals that once he shifts he has no control over himself, and then he calls a "truce". Outside, Damon stabs Mason with a silver knife, and it did nothing, except making an enemy, as he said to Damon.

At the cellar Katherine keeps insisting that Stefan loves her and then comes the flashback of when Stefan confesses his love for Katherine after the Founder's Ball, without compulsion, as she said,"I never compelled your love. It was real and so was mine." Katherine also revealed that back in 1864, she made a deal with George to have all the vampires killed in the church in exchange for her escape, and her part of the deal was to give him what he wanted, the moonstone, that also Mason wants. She says that her plan nearly failed before it even began, when Stefan's father spiked his blood with vervain and that night of the "round up", she was poisoned. She says that, that night she didn't want to be saved, and angrily Stefan says that they died for nothing, but stays silent when she adds that they died for love.

Meanwhile Caroline tries to keep Elena busy, as Katherine asked her to do so, so she could spend time with Stefan without Elena interfering. As Caroline was failing to do so, she kept saying to Elena that things weren't going to work out between her and Stefan. She insisted on driving Elena to Stefan's, and with a flat tire and Caroline not wanting to call for help, Elena finally managed to get to the Boarding House. Katherine threatens Stefan that if she doesn't get what she wants she has no problem killing Elena and a list of other victims. When he tries to attack her she throws him on the floor and angrily takes the chains off, she reveals that vervain doesn't hurt her since she's been drinking vervain over the last 145 years, because of the night he caught her by surprise when his father spiked his blood, and she didn't want it to happen again. She admits that she only faked it so she could spend time with him, then they get interrupted by Elena's voice from upstairs. Katherine quickly puts a stake through Stefan's leg and goes upstairs. Elena turns around only to come face to face with her doppelgänger. Both Katherine, but mostly Elena, are stunned with the resemblance. Katherine quickly leaves when Stefan comes upstairs.

Later that night at the grill Katherine tells Caroline that she already killed her once, and that she could easily do it again, if she didn't do her work. While Damon and Caroline where listening, Stefan and Elena agreed to back off their relationship. But when Elena returns to her room, it's seen that it was only a fake fight so they could fool the others, including Katherine, into believing that they broke up.

In the end of the episode Katherine remembers when she was escaping from Mystic Falls, with the help of George. As she looked behind her she saw both Damon and Stefan on the ground after being shot, and before she leaves in her carriage she goes to Stefan. Saying that she loves him, she kisses him, promising that they will be together again.