Through flashbacks, we see much of Angel's history. We see him sired by Darla in 1753, driving Drusilla mad and then siring her in 1860, and being cursed with a soul by the Kalderash clan in 1898. We then see his descent into madness until he is saved by the demon Whistler in 1996 who shows him the one thing that can save him and give his life meaning.
In the present, Angelus hatches a plan to awaken the demon Acathla, who will open a gateway to a hell dimension, and bring Hell to Earth.
Buffy and Willow discover Jenny's plan to restore Angel's soul, and Willow begins to work on recreating the spell. Buffy readies herself to stop Angel, and Kendra arrives with a powerful new weapon - a sword that can kill Acathla, who's just come in time to re-open hell.
Buffy arrives too late to save Kendra from Drusilla's surprise attack, and ends up being arrested for Kendra's murder. Escaping from the police, she goes to the hospital to find that Willow is in a coma and unable to complete the spell to restore Angel's soul. She also learns that Drusilla took Giles, and heads out to rescue him. On the way, she finds a most unexpected ally. Spike. He tells Buffy that he does not want the world to end either (it is far too fun a place) and that he wants to take Dru and leave town, so they declare an uneasy truce.
Buffy has to slay a vampire in front of her mother, and is forced to reveal that she is the Slayer. Joyce tries to stop Buffy from walking into danger, and tells her that if she leaves the house she is not to come back.
Her life in ruins, and the one chance of restoring her lost love gone, Buffy heads to the mansion to confront Angelus. After a long fight ensuing in Acathla's death, Buffy inorder to seal the portal from hell has to spill Angelus's blood. Just at the last moment Willow's spell through the Orb of Thesurah works and Angel's soul is restored but Buffy is forced to ram the sword through Angel's chest and sends him into hell sealing the portal.