In an attempt to locate the Beast and restorethe sun to Los Angeles, Wesley brings in a dark mystic, named Wo-Pang, to extract Angel’s soul and release his evil alter-ego, Angelus, who apparently encountered the Beast centuries before and may know how to kill it. The gang build a large cage in the basement and tie Angel down within it. Wo-Pang begins to cast the spell. Wo-Pang, however, is revealed to be a traitor, and attempts to kill Angel rather than remove his soul, and is subdued. Cordelia has a vision that shows the location of a sword that can kill the Beast - which is conveniently below Los Angeles. Angel, Cordelia, Connor and Wesley venture to a tunnel filled with traps, and Angel acquires the sword. In the tunnels, Cordelia and Angel confess their feelings for one another. Connor witnesses the exchange and runs off, but after talking with Angel gives him their blessing. The group return to the hotel, where they are attacked by the Beast. Angel orders the others away and fights, eventually persevering in stabbing and killing it. With the death of the Beast, the sun is restored. Against their better judgment, Cordelia and Angel make love, and as a result, Angel experiences a moment of true happiness after believing he finally won her heart. As he loses his soul, it turns out that this all took place in Wo-Pang's illusion, designed to make Angel achieve perfect happiness, and thus Angelus is awoken.
Angel voluntarily gives up his soul and reverts to Angelus. He remains as such for the next several episodes.
Continuity
This is the first true present-day appearance of Angelus since "Becoming", in season 2 of Buffy the Vampire Slayer. Angel had temporarily taken on the behavior of Angelus briefly during "Eternity", due to a drug-enhanced delusion of happiness, and had played the part of Angelus convincingly in "Enemies" in an orchestrated attempt to convince Faith that Angel had turned on Buffy. Other than Cordelia, this is the first encounter any of the gang has had with Angelus' former self.
This episode marks the second time a mystic is called upon to remove Angel's restored soul, the first attempt being "Enemies" from season three of Buffy the Vampire Slayer. In both episodes the two mystics are dressed in similar robes.