As soon as Seattle Detective John Kanin proposes to his girlfriend, Ruby, she disappears mysteriously. John's search for her brings him to her home town of Wolf Lake where he finds few allies and many more questions.

Luke and his gang of wolves attack a truck carrying toxic waste for Tyler Creed, leaving the driver badly burned and the truck leaking a toxic gas. Luke visits Sophia in the night to confess, but is almost caught by her dad and flees before telling her the whole story. Sheriff Donner questions Luke about the accident, but when Luke takes him to the site, the overturned truck is gone. All that remains is a strange white residue.

When a serial killer strikes again in Wolf Lake after over 30 years, Sheriff Donner and Deputy Molly withhold critical information about the case from John Kanin to keep him from finding out about the town's secret.

Kanin rents a house from Sherman and discovers to his horror that a disfigured young woman named Lenore is living underneath the home. She has many secrets about the people of Wolf Lake and what they did to her, but is reluctant to share them. Sophia, still unchanged, is approached by Luke to go to a rave. Luke's jealous girlfriend Presley confronts Sophia, saying she will never fit in with the kids from "The Hill". Presley claims Luke's interest in Sophia will vanish after her first change. Later, Sophia gets dressed up to go to the rave, but is confronted by her father the Sheriff, whom she told she was going to a friend's house. Meanwhile, Ruby confesses to Sherman Blackstone that she fears Tyler will not honor his promise to let John Kanin live. Sherman is hesitant to interfere, but says that Tyler's love for Ruby may be a vulnerability.