When the U.S.S. Enterprise encounters another starship, the U.S.S. Yosemite, trapped in a plasma streamer, a young engineer named Reginald Barclay comes up with a plan to reach the vessel. The crew adopts his plan, but Barclay balks when he realizes that the crew wants him to join them as part of the Away Team. Deathly afraid of the transporting process, he backs out at the last minute, leaving the rest of the Away Team to transport to the fire-marred Yosemite. There, they find that one dead body is the only sign of humanity, and they also notice several fragments of a broken sample container. Later, emboldened by a session with Troi, Barclay is able to rejoin the Away Team just in time to transport back. Each member returns to the Enterprise without incident except Barclay, who encounters a sinister-looking creature while in molecular form.
Back on board the Enterprise, Barclay is genuinely shaken by what he has seen. Geordi has O'Brien run a full diagnostic on the transporter, but the tests show nothing unusual. Barclay is able to relax, but becomes even more unnerved when his arm begins to radiate light in the precise spot where the creature touched him. Meanwhile, in Sickbay, Beverly performs an autopsy on the Yosemite crew member and is shocked as each of the dead man's systems briefly and separately come to life, one after the other.
Beverly's examination reveals that the crew member was killed when his body was invaded with high-energy plasma. Geordi, Data and Barclay realize that the plasma was brought inside the ship in the sample container that was fragmented, and that the plasma somehow exploded. The three try to determine why the explosion occurred, but Barclay is unable to concentrate, still shaken by what he saw on his arm. Geordi reports Barclay's condition to Troi, who immediately relieves him of his official duties. Late that night, Barclay returns to his room to sleep, but is unable to do so when his arm begins glowing again — this time all the way up to his shoulder. Sure that something must be hidden in the transporter, he summons O'Brien to help him find it.
O'Brien transports Barclay to the Yosemite and back, and Barclay encounters the creature during the trip. Sure of what he has seen, he wakes the senior staff to tell them, and while Picard is skeptical at first, he authorizes an in-depth investigation. Beverly examines Barclay and finds that he has been exposed to the same plasma that killed the Yosemite crew member.
Data and Geordi discover that the plasma particles are actually life forms, and that some of those life forms are inside Barclay. Thus Barclay must confront his greatest fear - of being dematerialized and permanently lost in molecular limbo. During the transport, however, Barclay encounters the creature again. Instead of panicking, he takes its hand and brings it back to the ship with him. When they arrive, everyone is shocked to see that it is a human being — one of the crew members from the Yosemite. The crew rescues the two other crewmen trapped in molecular limbo, and Barclay, having beaten his fear, emerges as a hero.