The police look for James in the Marsh murder. Bobby and Shelly tell Truman that Leo escaped; and Bobby reveals that he saw Hank shoot Leo the night the mill burned. Albert returns to Twin Peaks with information on Windom Earle.

Harry sinks into a deep depression after Josie's death. Josie's body holds more questions than answers. Norma's troubled sister, Annie, arrives in Twin Peaks. Wheeler and Audrey hit it off. Cooper's stalemate angers Earle.