Written by Robert Holmes
Directed by David Maloney
The TARDIS arrives in London at the close of the 19th century, and the Doctor and Leela quickly become embroiled in sinister goings on. They are attacked by members of a Chinese tong, while innocent women are disappearing form the fog-shrouded streets.
The mystery seems to centre on the Palace Theatre, where impresario Henry Gordon Jago has employed Chinese stage magician Li H'Sen Chang for a long run. But Chang is much more than he appears. He is behind the disappearances, using his immensely effective powers of hypnosis to control the women. And his ventriloquist's dummy, Mr. Sin, appears to be both alive and assisting him.
The Doctor's investigations, meanwhile, involve seeking the aid of Professor Litefoot, the pathologist investigating a dead body found in the Thames. The corpse appears to have be mauled by a large unknown creature and the Doctor deduces that the creature is some kind of giant rat. He and Leela eventually encounter just such an impossible animal in the sewers beneath London, it having been created by someone unknown advanced science capable of enlarging creatures.
Eventually, the Doctor uncovers the role of Li H'Sen Chang, and discovers that Chang is in service to what he believes is the embodiment of an ancient Chinese god Weng-Chiang. But Wneg-Chiang is in fact Magnus Greel, a despotic war criminal from the war-torn 51st Century. Using a dangerous form of time travel he has invented, Greel has journeyed back to the 19th Century, whereupon he lost the Time Cabinet that brought him here. The journey also severely damaged Greel's body, forcing him to absorb the life essence of others to survive. Greel's twisted nature means he prefers young girls to provide him with the essence he needs, and it's his experiments responsible for the giant rat in the sewers. His acolyte Mr. Sin is not a dummy, but is in fact a cybernetic homunculus with the brain of a pig.
Greel discovers that the Time Cabinet is in the possession of Litefoot, and he sends his men and Mr. Sin to retrieve it. The Doctor and Leela, along with Litefoot and Jago, arrive at Greel's lair to stop the criminal. During the battle, the Doctor manages to force Greel into his life force extraction chamber where the Butcher of Brisbane is finally destroyed. The threat from Greel may be ended, but the Doctor must still deactivate the berserk Mr. Sin, which he manages to do by ripping out his control circuitry.
Bidding farewell to Jago and Litefoot, the Doctor and Leela head on their travels through time and space...