Cameron (Summer Glau), disguised as a motorcycle cop, breaks into a power plant and cuts off power to Los Angeles, then she goes to the police department. She enters Evidence Storage and removes a box for which FBI Agent Ellison’s name is listed in the sign-out log, but there is nothing in the box. Sarah (Lena Headey) pauses at the headstone of Andy Goode. Derek Reese (Brian Austin Green) is recovering from his battle with the T-888 Terminator, and Sarah assures him the machine is destroyed. She can’t find Dmitri Shipkov, Andy’s chess partner, so Cameron joins a ballet class taught by his sister Maria (Angela Gots). A Russian mobster (Alex Vendow) turns up and demands money from Maria. Cameron understands Russian.
Sarah calls the FBI, posing as an evidence clerk, and finds that Agent Ellison (Richard T. Jones) claims not to have the Terminator hand. Ellison at home watches tapes of Sarah in the Pescadero Mental Hospital, then he visits the place to see her cell. He is told that Doctor Silberman lives alone in the mountains. Sarah breaks into Ellison’s house looking for the hand and leaves with a video of herself in the looney bin.
John (Thomas Dekker) finds Derek cleaning their guns. He tells Derek that Cameron can be trusted, but Derek hates that John trusts Cameron. When Sarah comes home, he tells her Cameron should go. John finds his mother’s tape and watches it in tears. Sarah tells Derek that Ellison has the Terminator hand and might know what’s going on. Sarah realizes that John was watching the tape, in which Sarah signed away her parental rights to John.
Agent Ellison finds Doctor Silberman (Bruce Davison) and they talk about Sarah over tea. Ellison passes out and wakes to find himself tied to a chair. To find out if Ellison is a Terminator, Silberman stabs him in the leg. He raves on about the Apocalypse, finds the hand in Ellison’s car, and sets his house on fire with Ellison inside. Sarah appears, punches out Silberman, takes the hand, and drags Ellison out of the burning building. Later, Silberman admits Sarah took the hand and Ellison has him locked up in Pescadero.
Cameron asks Maria Shipkov about her brother. The Russian mobster shows up and Cameron kicks him unconscious. Maria takes her to Dmitri’s (Mark Ivanir) hotel room, where he tells her a man tried to buy the Turk and gives her a note to that effect. She leaves, ignoring the sound of mobster gunfire behind her.
Sarah asks Cameron about the Turk and Shipkov, is given the paper, and is told that Shjpkov and his sister are now dead, though Cameron didn’t kill them. Sarah speaks to John about the tape. She destroys the hand in thermite. She promises to take Derek to where his brother Kyle is buried. Ellison is seriously disturbed about Silberman and is beginning to believe the story. Derek watches Cameron practicing ballet to the same music he heard while being tortured in the future.
When Cameron is on the police motorcycle, she looks exactly like the Terminator in T2. The Demon Hand refers to a story by Harlan Ellison, which was one of the influences on the first Terminator movie, along with another story by Ellison and one by Phillip K. Dick. Always steal from the best. Summer Glau was a trained ballerina, and you can see it every time she moves.