The story begins with Carl waiting for an elevator to take him to the law office of Robert W. Palmer. Palmer hascome out of nowhere to run for state senator, and is way ahead of the incumbent Senator James Talbot in the polls.
Meanwhile, upstairs in Palmer's office, his campaign manager, Steven Wald, tells Palmer that he's quitting and is also going to notify the district attorney about all the bribery and extortion that Palmer committed in his hometown. Shortly after Palmer and Wald get into the elevator, the cables snap, killing everyone inside.
When Carl takes pictures of the carnage, a big mean dog jumps out at him. Carl gets out of the way and manages to get the dog's tag in the process. Palmer is nowhere to found, but the dog is tailing Carl's every move.
Back at INS, Emily returns from her vacation in Italy with gifts for all, including a new hat for Carl (which he hates and can't wait to get rid of). Emily also purchased a bottle of Holy Water, blessed by Pope Paul VI. In the photo lab, Carl's pictures of the elevator accident are developed, but the dog disappears from sight.
Later, Carl tries to interview Palmer's wife, Lorraine, who barely gives him the time of day. As Carl is leaving, the dog attacks, ripping his coat open and retrieving its tag. Almost immediately after this incident, Carl almost literally runs into the missing Robert Palmer.
The next day, Palmer meets with Steven Wald's secretary, Susan Driscoll, with whom Palmer once had an affair. Susan tells Palmer that she knows about the information Wald had about Palmer, and attempts to blackmail him. Susan turns to see the same dog pounce on her, causing her to be hospitalized. Later that night, Palmer materializes in Susan's hospital room, tampers with her IV and kills her.
A while later, Senator Talbot is killed in a head on automobile collision. The same dog easily walks out of the other mangled car, which is the reason why the police cannot find the body of the other driver, which Carl finds astounding.
Back at the office, Carl is rifling through some old pictures of Palmer to do a story on him. One picture has Palmer wearing a medallion that looks like the one the murderous mutt was wearing. Once he puts 2 and 2 together, Carl realizes that Palmer has sold his soul to the Devil for political power (and who knows what else?) and the medallion enables Palmer to become the killer hound whenever he needs to rid himself of his opponents. Knowing he has to stop Palmer somehow, he takes Emily's Holy Water, prays that God will understand, and leaves the office.
Back at Palmer's house, Carl overhears Palmer & Lorraine discussing Palmer's "contract". Palmer has no intent of backing out as he likes what he's getting out of the deal. Palmer goes downstairs to his wine cellar knowing that Carl is there snooping around. After Palmer has performed his Satanic ritual, he invites Carl to join him. Palmer tells Carl that he is a very good reporter in spite of his character flaws, and even offers Carl the one thing he's wanted since his Vegas days: a return to New York with a major New York newspaper, and a Pulitzer thrown into the deal. When Carl asks for time to consider the proposition Palmer responds that the offer expires immediately and that Carl will be tonight's blood sacrafice if he refuses. Carl refuses and starts to make a run for it only to be confronted by Palmer's dog form back in the wine cellar. Thinking fast, Carl breaks the bottle of Holy Water against a wall. When the dog jumps Carl, he is able to rip off the medallion and throw it into the water. This does the trick as the Holy Water completely dissolves the medallion and the hound from hell is transformed into a normal dog. And Robert Palmer is no longer of this world...Read the full recap
Carl: (opening narration) The old cliche' that politics makes strange bedfellows is only too true. At one time or another, various and sundry politicians have found themselves, when it proved expedient, of course, sharing a blanket with the military, organized crime, disgruntled gun-toting dairy farmers, the church, famous athletes, the comedians, the list is endless. But there was a senatorial race not so long ago here in Illinois, where the strangest bedfellow of all was found under the sheets. The strangest and certainly the most terrifying.
Carl: (while waiting for an elevator) There's two things that just can't be rushed, anyone who is paid by the hour and an office building elevator.
Carl: (after he swipes Emily's holy water) It's all right Emily, God will understand...I hope.
Tony: You know, I once thought of entering the priesthood.
Carl: Then the Inquisition ended and all the fun went out of it for you.
Carl: What don't you like about this hat?
Tony: What's under it!
Palmer: You can have as little as you want, and much more, starting tonight.
Carl: Do I have to sign my name in blood?
Carl: Well, I'd like to think about it for a while if you don't mind.
Palmer: I'm sorry, Mr. Kolchak, but the offer expires almost immediately.
Carl: Uh, well... uh what if I don't agree to the terms of your deal?
Palmer: The pact I'm party to specifies blood sacrifices; I've offered lambs and goats and sometimes higher forms of life; YOU would be that sacrifice tonight.
Palmer: What is your answer?
Carl: Well, that's very generous of you but, would you mind if I had a talk with my attorney first?