While Sisko takes command of a new ship named in honor of the Defiant, Kira, Garak and Damar barely escape a Dominion ambush on Cardassia and are forced into hiding. Quark receives a static-filled message from Grand Nagus Zek, the Ferengi leader, that he's being named Zek's successor. Now cured of the deadly Changeling virus, Odo is outraged to learn that he was infected by Section 31 — an unsanctioned extremist organization within the Federation — but promises Sisko he won't take matters into his own hands.
Over lunch, Bashir and Ezri confess their mutual attraction, but decide to remain friends. On Cardassia, Weyoun publicly announces that Damar and his collaborators were killed shortly after arriving on the planet. Although Damar is still very much alive, he, Kira, and Garak are stunned by the news that Dominion forces have eliminated all eighteen rebel bases of the Resistance.
To Quark's horror, he learns that Ferenginar has instituted democratic changes — which he's determined to reverse. Back on Cardassia, Kira realizes that Damar's "death" has catapulted him to legendary status, and urges him to openly rally the Cardassian people against the Dominion. Meanwhile, the Female Shapeshifter devises a strategic retreat of Dominion forces to Cardassian space.
At the station, Quark agrees to sell his bar to Rom, and vows he'll reject his new position unless Zek lets Quark rule in the traditional Ferengi way. In the meantime, Garak slips into enemy Jem'Hadar barracks; on his way out, he's detained by guards. Kira and Damar watch from a distance, alarmed, because a bomb which Garak planted inside is set to detonate at any moment.
The trio overpowers the guards moments before the bomb explodes, and Damar galvanizes a crowd gathered near the scene. At the station, Bashir and Ezri share a passionate kiss; to everyone's surprise, Zek taps Rom as the new Grand Nagus. Sisko, Admiral Ross, and Chancellor Martok discuss the Dominion withdrawal and agree to attack the enemy at its new defense perimeter within Cardassian territory. Later, Kasidy tells Sisko that she's pregnant, and he silently shares her concern that the Prophets may react negatively to the blessed event.