Holly (Hattie Hayridge) detects a non-human life-form aboard Red Dwarf and alerts Rimmer (Chris Barrie). Meanwhile Lister (Craig Charles) is preparing a meal, of his own recipe — Shami Kebab Diablo. The shape-shifting creature appears, as a basketball, and bounces into the sleeping quarters where Lister is enjoying his meal. Lister catches the basketball, and places it on the table before going to look outside in the corridor. The creature rolls onto Lister's plate and changes into a shami kebab to disguise itself. Lister returns to his meal, but as he prods the kebab, it attacks him, triggering Lister's fear. To maximise terror, the creature turns into a boa constrictor, knowing Lister is terrified of them. Completing Lister's fear, the creature returns to its normal shape: A huge, fleshy, slimy-appendaged monster with sharp fangs. From between the jaws, a thin, slimy sucker extends and sticks to Lister's forehead, leeching Lister of his fear, on which the creature feeds.
As Lister recovers in the medical unit, Kryten and Holly explains what the monster is: A "Polymorph"; a shape-changing genetic mutant that went wrong, the 'Ultimate Warrior' that leeches off negative emotions like fear, guilt, anger, paranoia and drains them out of its prey. The crew discuss their options and decide to run off rather than take it on. They seal Lister (who, due to having no fear, is all too eager to take on the Polymorph) in the medical unit, and go off to prepare Starbug for a getaway.
As they travel through the cargo decks, Rimmer falsely alerts the others to the Polymorph. The Cat (Danny John-Jules) and Kryten fire two heat-seeking bazookoid bolts down the corridor, where Rimmer is pointing. As the bolts head down and turn back, Rimmer apologises for the mistake. However, the bolts are now homing in on the Cat, and he flees. The Cat manages to trap the bolts behind a door, and, on his way back, he is joined by a mysterious and beautiful woman (Frances Barber) who flatters the Cat on his good looks, appealing to his vanity. Then, she turns out to be the Polymorph and feeds on the Cat's vanity. Kryten rushes round the corner, trying to save the Cat, and is closely followed by Rimmer. Rimmer tells Kryten that it is his fault the Cat was attacked, blaming him for the group splitting up, making Kryten feel terribly guilty for his actions. Rimmer turns out to be the Polymorph in disguise (the real Rimmer having run the wrong way before Kryten found the Cat) and sucks out Kryten's guilt. On their arrival back at the medical unit, Rimmer finds his mother (Kalli Greenwood) lying down with Lister, apparently having had sex with him while they were away. Rimmer's mother expresses the experience to her son in graphic detail which greatly angers Rimmer, only to have his mother change into the Polymorph and devour Rimmer's anger.
In the sleeping quarters, the emotionally crippled crew try to work out their next move, but things do not go well. Rimmer plans to 'hit' the Polymorph with a 'major leaflet campaign' followed up by a series of charity drives, Lister is determined whatever plan they think up must be as violent as possible (even if it involves him killing himself). The Cat feels he is too worthless to have an opinion and asks the others to pretend he's not there, and Kryten wonders if he can save himself by sacrificing the others while dishing out insults. Despite their disadvantages, the four head back down to the cargo decks to confront the monster. Although things don't start well, by pure luck, the two heat-seeking bazookoid bolts are released and home in on the hottest object in the room: The polymorph, which is destroyed instantly, and all the crews' emotions are restored. The Cat is desperate to clean himself up, and Kryten is ready to commit suicide to make up for his bad behaviour from earlier. Outside in space, a second pod floats near Red Dwarf, revealing a sign on the side reading "Contents 2". Down in the cargo bay, the group walk in line, first Cat, then Kryten, Rimmer, Lister - and finally, a second Lister. This second Lister stops turns out to be another Polymorph.
The Remastered version replaces the second Lister scene with another shot of a bouncing ball, coupled with a caption explaining that the second Polymorph, which was less intelligent than the first, was stowed away in Lister's clean underpants drawer, where it died of old age many years later. According to Doug Naylor, the reason the ending was changed in the Remastered version was because he was getting tired of fans asking what happened to the second Polymorph.