New York City's inhabitants have gone insane due to the manipulations of the Shadow King on the psionic plane. Having used Psylocke, whose astral form is now a jumbled mess, the villain triggered a worldwide psychic blast that has rendered Earth's telepaths impotent. He leaves to torment the other X-Men as Psylocke's spirit shatters.
The Shadow King appears to Dr. Cecilia Reyes, Maggott and Marrow, offering them fulfillment of their dreams if they swear allegiance to him. Elsewhere on the psionic plane, Cannonball struggles with the crazed phantom image of his late father, Wolverine is reduced to a feral state, and Storm is buried alive amongst the corpses of her fellow X-Men.
Back at ground zero of the psychic blast, Psylocke's astral self has transformed into new, darker shape. She frees the spirit of Storm's foster mother, Ainet, who leads her to Storm. Psylocke breaks through the mental barriers Storm had erected as a defense mechanism against her claustrophobia, freeing her as well. The three then go to find the Shadow King.
While the villain awaits the decision of Reyes, Maggott and Marrow, Psylocke confronts him, distracting him while Storm and Ainet reach the other three. As Marrow leaves to find and aid Cannonball, Psylocke sends the rest back to the real world, to the African village where Storm once lived.
Augmenting his abilities with the damaged psyches of humanity, the Shadow King holds Psylocke at bay, becoming intoxicated with power, but losing focus on the battle. Psylocke reaches out with shadowy tendrils, and encases the nexus of the Shadow King's being within a shell of the dark matter, effectively cutting him off from his power source, and releasing mankind from his madness.
In the village, the X-Men collect themselves, as Dr. Reyes organizes them to help the injured villagers. Cannonball thanks Marrow for her aid and she snaps at him while inwardly she appreciates his gratitude. Psylocke returns to the real world and embraces Storm, revealing that her psychic abilities have been shut down.