After Elena removes the dagger, Elijah wakes and must immediately leave the house as he has not been invited in. Elena asks him to trust her and gives him the dagger to prove she's being honest. In a flashback to 1492 England, Katherine meets Elijah and Klaus for the first time. Stefan and Damon argue over Elena's disappearance and whether or not they should go after her and Elijah. Elena tells Elijah everything that has happened since his death. In return, Elijah tells Elena about Klaus. Elijah and Klaus were raised as brothers, but Klaus was in fact the result of their mother being unfaithful with another man, who was from a werewolf bloodline. Elijah's father hunted down the man and had him and his family killed, beginning the schism between werewolves and vampires. Klaus is a vampire/werewolf hybrid and can only be killed by a witch. The sun and the moon curse was a fake created by Elijah and Klaus -- the real curse is that Klaus' werewolf side had been forced into dormancy by witches. He wants to bring it to the surface and eventually create his own race. Jenna finally finds out about the vampires from Stefan and Klaus/Alaric. Elsewhere, Katherine is being held captive by Klaus. Damon finds her and gives her a vial of vervain to protect her from further compulsion. At the end of the episode, Maddox (Klaus' servant) and Greta (Luka's sister) perform a ritual: releasing Klaus' spirit from Alaric's body, and putting it back into his own.
Damon is willing to take extreme measures to prevent Klaus from harming Elena. His actions pit Damon and Stefan against one another, and the tension that started brewing between the two over their differing opinions of how to protest Elena turns into a full-scale conflict. Tyler receives a concerning phone call and returns to Mystic Falls. With the full moon marking the arrival of the sacrifice ritual, Stefan and Elena spend a romantic day together, worried that it might be their last.