In the country, a very pregnant Amy is at home and suddenly has birthing pains. She yells for her husband, Rory, who comes running inside and discovers that she's heard a false alarm. They hear a thundering noise outside and Amy looks out the window and realizes that it's the TARDIS. The Doctor steps out and calls for Rory, and asks to see Amy. He congratulates her on her condition, and then wonders if she's pregnant.
They go for a walk into the nearby village of Leadworth, and the Doctor notes that there doesn't appear to be anyone around. Amy notes that it's a quiet place, unaware that an elderly woman is secretly watching them from her home. The Doctor is quickly bored and wonders what they do for excitement, and they quickly run out of things to explain. As they talk, the three of them doze off.
The Doctor wakes up on the TARDIS floor. Amy and Rory are there, five years younger than in the Doctor's dream. He's relieved to see them and notices that the console is malfunctioning. Rory and Amy explain that they also had a dream where Amy was pregnant with Rory's child. They wonder how they could have the same dream, but the Doctor dismisses it as a random effect of time travel. They hear birds singing like in the village, and wake up...
... and find themselves in the village, thinking they were dreaming they were back in the TARDIS. The Doctor tells them not to trust anything they think is real, and that they have no idea if they're flashing forwards or backwards in time.
Back in the TARDIS, the trio wakes up as the TARDIS shakes. The Doctor kicks the console and explains that he threw the TARDIS manual into a supernova. They wonder if the TARDIS malfunction has anything to do with their dreams, and the Doctor again tells them that they can't trust anything they're experiencing. The power suddenly goes out and the Doctor explains that the TARDIS has gone dead. They hear the birds singing again, and they find themselves back in Leadworth. A passing villager refers to Rory as a doctor, and the Doctor wonders if it's a fulfillment dream. The Doctor notices a nearby old peoples home, and all of the inhabitants staring at them. He decides to go inside and start something.
Inside, they talk to Mrs. Poggit and the others, who all know Rory as a doctor. The Doctor grabs Mrs. Poggit and realizes that something is strange about her. They hear the birds singing, pass out, and find themselves back in the TARDIS. The temperature is dropping because of the power loss. The Doctor warns them not to trust Mrs. Poggit, who doesn't appear to be human. A man in a suit suddenly appears and introduces himself as the Dream Lord. He is insubstantial, and taunts them over their lives and decisions. The Dream Lord notes that he's seen all of their dreams and knows what they really think. The Doctor is unimpressed and the Dream Lord challenges them to determine which world is real. Further, there is a deadly danger in both worlds, and they must sort it out. He then causes them to pass out again.
Back in Leadworth, the Dream Lord is there and says he's known the Doctor for a long long time. He then explains that if they die in the dream, they'll wake up. However, if they die in reality, they'll be dead for real. Once he fades away again, the Doctor claims that he doesn't know who the Dream Lord is. He notices that all of the elderly pensioners have disappeared and runs outside. He suggest to Amy and Rory that there must be some kind of giveaway that will show them which reality is a dream, but he can't spot it because the village is so dull that it's disrupting his thought processes. Amy fakes more pregnancy pains to put the Doctor up and warn him that he can't dismiss her life as dull, and then walks away with Rory. As they go, the Doctor notices people walking up a ramp through a gate in the wall.
The Doctor goes to a nearby playground and watches Mrs. Poggit at the top of the ramp. The trio passes out again and find themselves in the TARDIS. The Doctor insists they need to figure out what Mrs. Poggit is up to. While the Doctor tries to make repairs, Rory says that he prefers the other life where they're married and having a baby. Amy wonders why they gave up life in the TARDIS as companions, and insists that the Doctor will eventually fix things. Rory thinks that she doesn't want to marry him, but Amy insists that she loves him. When he insists they need to grow up eventually, Amy wonders why.
The Doctor makes up a generator from kitchen appliance and attaches it to the console. They manage to activate the scanner, and realize that they are plummeting into a cold star, something he's never encountered before. Frustrated, he admits that he doesn't know how to handle it, and that they only have 14 minutes until they enter it. As the Doctor goes to work, Rory accuses it of being the Doctor's fantasy life. The Dream Lord appears and taunts the Doctor, and then the birds start swinging out.
Back in Leadworth, the Doctor goes up the ramp and discovers that all of the children have disappeared. Rory insists that the village is the reality, and that nothing bad could happen there. Amy is less impressed. Meanwhile, the Doctor has found piles of dusts where the children were standing and they realize that they have all been vaporized. The elderly pensioners leave the old peoples home and the Doctor believes they're responsible. The pensioners all turn toward them as the Dream Lord appears and mocks them, saying he knows where Amy's heart lies. The Doctor says he knows who the Dream Lord is, and there's only one person in the universe who hates him as much as the Dream Lord. He tells them to worry about the approaching pensioners and disappears.
The Doctor talks to the pensioners, who inexorably approach. One of them grabs Rory and casually throws him to the ground. They all open their mouths and reveal creatures inside. One of the creatures sprays poison at them, and the Doctor asks them to talk. The aliens explain that they were driven from their home, humbled and all but destroyed, and will do the same to the residents of Earth. A passing villager catches their attention and the Mrs. Poggit alien disintegrates him with a spray of poison.
Amy and Rory take advantage of the Doctor's distraction to flee, but another elderly pensioner closes in on them. Rory can't bring himself to hit her at first, but finally knocks her down. They get back to their cottage and lock the doors, and Amy worries about the Doctor.
The Doctor flees from the possessed pensioners, but the birds sing again and he desperately tries to stay awake. He finally takes refuge in the butcher shop and locks the doors. The Dream Lord appears to taunt him and warn that the pensioners will destroy him if he passes out. The Doctor tries to block out his voice without success and the Dream Lord invites the pensioners in. They close in on the Doctor, who begs them to stop, and he ducks into the walk-in freezer and seals the door. He then collapses... and finds himself back in the TARDIS.
The Doctor explains that they have to agree as a group to which reality is one they will accept. Rory prefers the village, and the Doctor wonders who Rory is competing against. Amy hands out ponchos and says that they need to face death together. The Doctor suggests that they split up, and the Dream Lord arrives to agree with the Doctor's plan so he can separate Amy from the others. The birds sing again and the Doctor and Rory pass out. The Dream Lord closes in on Amy, saying they'll have fun.
Rory wakes up in the village next to the sleeping Amy. He drags her upstairs to the nursery as the pensioners break through the locked doors. Seeing the nursery, he contemplates his life in the village, and then looks out the window. Below, the pensioners are trying to get into the TARDIS. After barricading the door, Rory sits and tries to think.
The Doctor wakes up in the butcher freezer and hears the other pensioners screaming outside. He opens the door and short circuits the lights, distracting them so he can escape. He spots another pensioner attacking a man in a van, knocks the pensioner away, and drives to rescue the other younger residents.
As the TARDIS drifts downward into the cold star, the Dream Lord notes that the Doctor always leaves her alone in the dark without apology. She insists the Doctor doesn't have to apologize, and the Dream Lord warns that he never will. She asks who he is and what he wants, and figures that the Doctor will eventually tell her. The Dream Lord notes that she can't trust the Doctor, and asks if she knows what the Doctor's real name is. He then asks who she will choose, Rory or the Doctor, and that they are waiting for her to make the choice. He disappears again, leaving Amy to consider what he's said.
The Doctor drives out of the village and the Dream Lord appears to tell him it's time to make up his mind. The Doctor wants to find his friends, and the Dream Lord says that his companions aren't his friends, and the Doctor eventually abandons them. The Doctor arrives at Rory's cottage and sees the pensioners trying to break in.
Amy wakes up and asks where the Doctor is. Rory says he wants to do something for her and takes out a pair of scissors... and cuts off his ponytail. They're interrupted when the Doctor climbs in through the second-story window and admits that he's not sure which reality is real. Amy goes into labor for real, and Mrs. Poggit breaks through the window and sprays Rory with venom. The Doctor knocks her back, while Rory begins to disintegrate. As he dies, he tells Amy to look out for their baby. She stares at the Doctor in shock and wonders why he couldn't save Rory, and the Doctor admits that he doesn't always save everyone. She wonders what the point is if he can't, and then insists that the village is the dream. It has to be, as it's her only chance to save Rory. And if isn't a dream, she doesn't want it.
Amy walks outside past the pensioners, who don't attack her. When she wonders why, the Doctor says that they may know what they plan to do. She asks for the van keys and explains that she has to have Rory back. He gives her the key and they get in. The Dream Lord appears to the Doctor and merely stares at him. Amy drives directly into the front door of her house.
Inside the TARDIS, everything is frozen. The Doctor and Amy wake up. After a moment, Rory wakes up as well, and takes Amy's hand. The Dream Lord congratulates them on making the proper choice, and the TARDIS pulls away from the cold star. He activates the power systems and leaves them to ponder his fictions. Rory doesn't remember what happened, and Amy embraces him. They realize that the Doctor is preparing to destroy the TARDIS, insisting that the cold star can't be real and the Dream Lord has no power over the real world. He knows who the Dream Lord really is, and both realities must be dreams.
Amy and Rory come to the TARDIS console room, where the Doctor explains that psychic pollen from an alien planet was caught in the rotor. When they heated up, they induced a dream state. The Doctor blows them out the door, and then explains that he was the Dream Lord, as the pollens fed upon him. They didn't affect Rory and Amy because the Doctor carefully chose them for their resistance. When Amy wonders about all the things the Dream Lord says, the Doctor tells her to pay attention to what Rory now has to say. Rory wonders what stopped the Leadworth dream, and Amy tells him that he died and she chose him. They kiss and the Doctor applauds, and then asks if he should leave them alone or take them to a new destination. Rory says that he's happy anywhere, and it's Amy's choice where they go next. As the Doctor sets the controls, he sees the Dream Lord briefly in his own reflection on the console and looks around nervously.