The third episode of Welcome to Derry takes us back to 1908, where the fairground atmosphere pulses with life. Francis, a young boy out of place in this bustling environment, catches a glimpse of a creepy clown in the distance and is encouraged to venture into the Hall of Mirrors alone. As he detaches from his fascinated companions, Francis notices a strange figure lurking in the shadows. Following it, he is frightened to death by an old man. In his haste to escape, Francis collides with his father, who urges him to be braver.
On their way home, their car conks out, and Francis is forced to buy water for his father. Along the roadside, he encounters a girl named Rose, who covets his slingshot but lacks the funds to purchase it. After making the trade, the two spend more time together until Francis accidentally runs into the woods, where an old man—the same one from the fairground—stalks him. Transforming into a monstrous humanoid, it chases Francis through the woods until Rose arrives, hitting it with her slingshot and saving Francis from certain doom.
Flashing back to the present, we find Lilly about to be discharged from Juniper Hills. In her absence, Ronnie becomes a target for everyone at school, especially the popular girls. When they scrawl graffiti on her locker with references to "Hatchet Hank," Ronnie furiously wipes it off with her bare hands.
Covered in ink, Lilly comes to her aid in the bathroom. She mentions her episode in the supermarket and believes they need to gather evidence of this entity. A camera might do the trick, but neither of them know how to develop a roll of film, so they must recruit new members to their gang.
Hank remains behind bars, as expected, but he's not in a particularly communicative mood. His alibi about being home in bed doesn't hold up with the Chief, who provokes him into revealing his favorite brand of cigarettes. Ironically, those cigarettes have been found by the Chief, and as a result, Hank is on the verge of being labeled a child killer unless he comes up with something else.
At the airbase, General Shaw is relentless in his pursuit of Pennywise. He enlists Dick as a "human compass," to be dropped by helicopter over the central area. Dick is handed a box by the General, which houses the very slingshot from the opening flashback. As he touches it, he senses the entity's presence, and his gaze snaps to attention. Walking through the pod, he finds himself in a chilling vision of his own, where he sees the killer clown itself in the shadows, asking who he is before turning to his grandmother with a warning: "He's coming."
Back in reality, Leroy manages to stop Dick from opening the back of the copter and falling to his doom. This encounter is relayed to General Shaw, who inquires about Dick's experience. Dick is uneasy, convinced that their actions could cause a severe backlash.
Meanwhile, not everyone is pleased with the military's current plans. The Native Indians in the area hold a community meeting to discuss the encroachment of the dig sites on their land. Given that they have unmarked burial sites here, they are concerned that the military is overstepping their mark and defiling their deceased. Rose is also present and doesn't want to stop the military folks until she finds out what they're actually doing. Instead, she decides to send over some cease and desist letters.
The letter finds its way to General Shaw, who pays Rose a visit, and the two are soon reminiscing about their past times. This is the same Francis Shaw we first met in the episode's opening. He proposes a partnership, but Rose is not entirely convinced.
Meanwhile, the kids have enlisted Rich and Will to help them develop their film and lure Pennywise out of the shadows for a snapshot. It turns out that Rich has a history with the occult, as his uncle used to be a Santeria priest and had conjured evil spirits before. Ronnie believes they can use this method to conjure Pennywise, so they head to the graveyard and light candles around it. Sitting in a circle, they begin their ritual.
At the Hanlon residence, Dick pays a visit for dinner, and Leroy is taken aback when Dick mentions Will. He never knew Dick had a son. After dinner, the two men head outside to talk on the porch. Leroy questions Dick about the helicopter incident and knows that he has the power to get into people's heads. The feeling he had in the air is the same as the one he had the night Shaw put a gun in his face.
Dick promises to stay out of Leroy's head, given what he's seen of what the Major thinks about when facing death. Leroy analyzes it and sees it as a powerful tool to wield. Dick wants him in the trenches with him.
Back in the graveyard, the kids try to leave when they think the conjuring is a failure, but unfortunately, a whole bunch of ghouls attack them. The kids try to race off on their bikes but are all attacked by the dead. Each of them snaps photos of the strange spirits that float through the air after them, but unfortunately, Will is left behind.
Will is by an abandoned and run-down crypt, so he decides to head deeper into the spooky ruins alone. When he does, he snaps another photo before joining the others. After their spooky encounter, the four hug and then break into the school together.
The guys develop the photos they've taken, and it shows all the strange phenomena they encountered. Inside the crypt Will walked into, the picture reveals the outline of a killer clown.
