En route back from vacation, Picard, Ensign Ro, Keiko and Guinan run into danger aboard their shuttlecraft. O'Brien manages to transport the group onto the U.S.S. Enterprise, but a molecular mishap brings them back as12-year-old children. Beverly examines the group and finds that while their bodies have changed, their minds remain intact. However, when young Picard attempts to resume his command and lead his crew as though nothing has happened, his staff has trouble taking him seriously. Because of this, Beverly gently convinces him to temporarily relinquish command to Riker.
Later, Geordi tells Beverly that the transformed crewmembers were affected by a molecular reversion field, and that the transporter can be used to reverse the effects and bring the group back to normal. But before they can begin the process, the ship is attacked without warning by two Klingon warships.
The crew attempts to retaliate, but the enemy ships manage to take out the Enterprise's power systems. Suddenly, Worf picks up transporter signatures in three cargo bays. As the crew prepares to defend the ship against the invaders, two Ferengi materialize on the Bridge. Their leader, Lurin, arrives and informs Riker and the others that he has declared the Enterprise to be a loss and is beginning salvage operations according to Ferengi law. If the crew refuses to comply, they will be executed.
Young Guinan points out to young Picard and the transformed crew members their unusual appearance gives them a chance to put plans into motion without the Ferengis' knowledge. Using the computer in the schoolroom, they obtain a diagram of the ship's inner workings and use it to sneak around and collect phasers and other small weapons. Guinan and Ro crawl through a Jefferies Tube to wait to try out their plan near Main Engineering. The only problem remaining is the need to obtain access to the Bridge.
To accomplish this, young Picard throws a tantrum and forces a Ferengi to take him to Riker in the Observation Lounge, pretending that Riker is his father. During their conversation, the young captain subtly communicates to Riker to grant him systems access through the school computer. Unfortunately, the Ferengi are also demanding access to the computer, and threaten to kill all the children on board if Riker falls to comply. The children manage to capture all of them with the "weapons" they have stolen, and when the action subsides, Beverly and O'Brien use the transporter to restore the group to their adult states.
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