A man is chumming the waters off of a boat at night, when a shark jumps out and latches onto his arm, dragging him into the sea. The next morning, Lassiter and Juliet are at the beach where the body of what appears to be a shark attack victim has washed ashore. Lassiter thinks he sees what might be a knife wound among the shark bites. He sees Shawn and Gus approach, and, determined not to be outdone this time, beats Shawn to the punch, claiming to the press that the victim was murdered. The reporters crucify him, but Shawn is on board with his theory, having spotted the possible knife wound himself. They all go to the coroner, who says he can't identify the victim off of fingerprints, since the fingers are still in the shark, along with the victim's wallet. Lassiter says he'll put out a bulletin for anyone who catches a shark, so they can at least identify the man, but Shawn still pushes the murder angle. The coroner says he can't rule out a stab wound, but the knife used would have been jagged, like a tooth. Now Lassiter is more determined to find the shark, in order to ID the victim and start tracking down his killer.
They go down to the marina to alert the fisherman, but are horrified to find out there is $10,000 reward on the shark, and the boats are going out with dynamite on them, which will ruin any chance of checking the contents of the shark's stomach. Shawn sees Henry is loading his boat to try to catch the shark as well. Lassiter and Juliet go out on a police boat but have no luck finding the shark. Meanwhile, back at the Psych office, Shawn has been researching knives that look like shark teeth and has found a match. He looks up at the television and sees Henry on the news - he's caught the shark. Shawn and Gus go to Henry asking to see the shark. Henry tells him it's in storage on ice, but once Lassiter arrives with a similar demand, Henry is forced to take them all there. When they arrive, they find the shark has been stolen. Shawn sees a trail of melting ice and follows it to a group of circling birds where he finds the shark carcass gutted and discarded. Dr. Phoenix, a shark expert who has been tracking the story, arrives and tells them this is not the shark that killed their victim. Shawn sees that the knife used to gut this shark matches the stab wound and realizes someone is trying to get to the killer shark's stomach contents before them. Lassiter gets a call that a leg just washed up on the beach and they all go to the coroner, who tells them the leg has markings near the ankle, like it was tied to something. He also says that he found different DNA in one of the wounds, as if the shark bit someone else first, then transferred that person's tissue onto his man, which means there is a second victim.
They need to find this shark now more than ever, and Dr. Phoenix gives them insight on where to look for it. But the mayor has upped the reward money and now even more people will be on the trail. Lassiter goes to the marina to warn the fisherman about destroying evidence. Juliet finds him there and tells him they've figured out the victim is most likely Dante Pavan, a web millionaire from Seattle who came down a few days ago. His car is in the parking lot there at the marina. Inside, they find evidence that Pavan was an activist who has a habit of pulling crazy stunts for his causes. Lassiter thinks he was probably in the middle of one when the shark attacked but Shawn is still on murder, pointing out that someone gutted Henry's shark looking for something. He convinces a fisherman, William Tanner, that he can psychically find the shark, and Tanner agrees to take him and Gus out on his boat. Out on the water, Shawn uses what he learned from Dr. Phoenix, to psychically guide Tanner in the right direction.
Meanwhile, Lassiter and Juliet sort through more of Pavan's things at the police station, where they find evidence that Pavan was targeting local fishermen for their illegal fishing practices. They just need to figure out who Pavan targeted first. Back on Tanner's boat, Shawn finds stacks of notices from the fishing board and a set of shark-toothed knives, with one missing. Tanner is the killer, and he has just hooked the shark they are looking for, with the murder weapon in his gut. Shawn sees a wound on Tanner's arm and puts it all together. Tanner killed Pavan and tried to dispose of the body by tying it to his boat and chumming for sharks. But a shark took a bite out of Tanner, too, taking the murder weapon he had in his hand with him. Tanner wants to destroy the shark and the evidence, so Shawn quickly cuts the line, freeing the shark, while Gus knocks out Tanner before he kills them, too.