During the full moon, a woman in a red, hooded cloak is chased through the woods by an unknown assailant. Unfortunately, she trips and falls, allowing her pursuer to catch up and attack her. The next day, Castle finds Martha in his writing room, working on her one-woman show with a playwright named Marcus. Martha recounts (more like, wildly exaggerates) the dramatic tale of how she gave birth to Castle, while Marcus types away on a laptop. Castle tries to no avail to kick the pair out, just as he receives a call about the dead woman in the woods. At the scene, Castle notices the woman's red cloak as well as claw marks on her face (as if from a wolf), and dubs her Red Riding Hood. Later, at the precinct, he and Beckett are debating the merits of fairy tales, when Esposito informs them that Red Riding Hood is actually Amy Morgan and that her sister Leslie is on her way in. From Leslie and her husband Darren, Beckett and Castle learn that Amy was a busy, high-powered attorney. They're clueless as to what Amy was doing in those woods, and insist that the Red Riding Hood costume doesn't sound like anything Amy would ever wear. After the interview, Esposito informs them that Amy had made a withdrawal from her savings account, in the amount of $50,605. Moreover, the cash hasn't turned up in Amy's apartment, nor had Amy made any purchases in that amount. Just then, Lanie summons Beckett and Castle to the morgue, explaining that she found a wolf hair on the victim and that the claw marks were shallow and made from a single wolf claw. Lanie says the real cause of death was a lethal combination of ketamine and oxycodone. Back at the precinct, Ryan, having talked with Amy's coworkers, informs Beckett and Castle that Amy hadn't been herself lately, and that she'd missed a mandatory meeting on Friday for personal reasons. Then, while Beckett has Ryan do some more digging into Amy's personal life, Esposito informs them that there's something that they need to see. At another crime scene, Beckett and Castle find a woman dressed like Snow White, seemingly dead from a poison apple.
Esposito identifies the latest victim as Kristina Curtis, while Lanie figures out that Kristina was dosed like Amy, rather than killed with a poison apple. Given the M.O., Beckett and Castle realize they have a potential serial killer on their hands. Back at the precinct, Esposito interviews Kristina's husband Noah, who says Kristina ran an art gallery that she'd taken over from her father. Noah doesn't appear to know who Amy Morgan is, or what her connection to his wife might be, but says that Kristina had been acting strangely lately and that she'd cancelled a lunch date with him on Friday, claiming she'd needed to take care of something at the art gallery. Later, as Beckett and Castle puzzle over the connection between the two victims, Esposito learns that Kristina had raided her trust fund to the tune of $50,605. Then, Ryan informs them that the costumes the victims had been wearing were made by the same manufacturer, and that he's just waiting on a list of stores that carry them. That night, Castle returns home to find Martha and Marcus rearranging the furniture, getting ready to host a reading of her one-woman show the next night. Martha then casually mentions that she invited Beckett to the reading. The next day, Castle tries to talk Beckett out of going, especially since Martha seems to be rewriting history to make it her own little fairy tale. Beckett, however, doesn't see the harm, pointing out that it's no different than him basing Nikki Heat on her life. Changing the subject, Castle asks for an update on the investigation, but Beckett hasn't had much luck. That's when Ryan shares some good news: he's tracked down the website the killer had ordered the costumes from. He also got a name — Jamie Isaacson — and learned that the killer had ordered a third costume, Sleeping Beauty.
Ryan and Esposito lead a raid on the killer's address, only to find an elderly woman and an apartment full of dolls. Turns out, the old woman is Jamie Isaacson, and she insists she didn't order any fairy tale costumes, meaning someone must have stolen her credit card info. Back at the precinct, Esposito learns that Kristina had looked up walking directions to Glassman's Café on Friday. While he goes to talk to the staff there, Beckett and Castle try to get into the mindset of the killer before he can kill Sleeping Beauty. Suddenly, Beckett gets an idea, realizing Sleeping Beauty probably withdrew the same amount as Amy and Kristina and that they can track her down that way. Meanwhile, Ryan and Esposito interview one of the waitresses at Glassman's Café, who confirms that Kristina was there with Amy and another woman but otherwise, is of little help to the investigation. Back at the precinct, meanwhile, Beckett and Castle are able to narrow down the bank withdrawal to a Charlotte Boyd, a high-end broker for a real estate firm. While Ryan calls to give Beckett an update on the case, Castle tries to call Charlotte, but she doesn't pick up. So, Beckett and Castle rush over to Charlotte's apartment, finding her unconscious on the bed wearing a Sleeping Beauty costume. Castle quickly checks Charlotte's pulse, thankfully finding she's still alive.
Later, still in Charlotte's apartment, Beckett learns their latest victim is in stable condition, and that she and Castle had gotten to Charlotte just in time, as she'd been dosed just like Amy and Kristina. As CSUs finishing sweeping the apartment for clues, Ryan uncovers a photo of a man and the three victims, wearing the same fairy tale costumes they were attacked in. The photo is dated 05/06/05 (hence, the odd withdrawals), and on the back is written "Who's the guiltiest of them all? If you pay, you'll live to see another day." The detectives decide to find the guy in the photo, hoping he can shed some light on why the victims were being blackmailed. Unfortunately, though, the guy in the photo, Owen Thomas, died after leaving a fairy tale-themed rave with the victims. He was run over by a car while high on ketamine and oxycodone, leading Castle to the conclusion that it was the victims who had run him over and that someone who knew Owen is now out for revenge. Just then, Beckett gets a call that Charlotte's awake. She and Castle go talk with Charlotte, who admits that she and the others were being blackmailed but insists that they didn't kill Owen. She says they were driving home from the rave, when Owen started freaking out, so they'd made him get out and walk. She claims they didn't hear about his death until the next day, and that they were so scared, they'd made a pact to never see other again or talk about what happened that night. Back at the precinct later, Esposito informs Beckett and Castle that Leslie's husband Darren is actually Owen's older brother, and that's when Ryan reveals that Darren was caught on security camera getting the photo from the rave developed at a photo lab.
Esposito and Ryan decide to re-interview Amy's sister Leslie. They show her the photo, and though she's confused as to what it has to do with Amy's murder, she nonetheless reveals that she and Darren had recently come across a roll of film in her father's attic and Darren had thought it would be fun to get it developed and see what was on there. Meanwhile, Beckett and Castle are interrogating Darren, who reluctantly admits that he started blackmailing the ladies after he found the photo. He says he intended to use the money to set up a scholarship fund in Owen's name, and asserts that he had nothing to do with Amy and Kristina's murders. Later, Darren is being taken away in handcuffs, when Leslie confronts him about murdering her sister. He continues to proclaim his innocence, but she refuses to believe him and storms off. Eventually, Castle begins to feel uneasy, and points out that it doesn't make sense for Darren to both blackmail and murder the victims. Beckett, however, counters that Darren's probably a psychopath who copped to blackmail to avoid a murder charge. She then changes the subject, reminding Castle that they better get going if they're going to make Martha's play. That night, they arrive at Castle's loft, just as Martha is preparing to put on her one-woman show in the living room. First, though, she asks Castle for help fixing a bow in the apron she's apparently decided to wear for the play. That's when Castle has a revelation regarding the bows on the victims' costumes, and realizes he and Beckett had arrested the wrong man.
Beckett and Castle return to the hospital to question Charlotte further. The day after Owen had been killed, Amy had taken her car into a body shop, proving Charlotte had been lying when she'd said she and her friends hadn't killed Owen. Confronted with the evidence, Charlotte says Amy had hit Owen, but insists it was an accident. That's when Castle points out that the bow on Charlotte's costume had been tied differently than the one on Amy and Kristina's costumes, and that according to one of the doctors, Charlotte had been dosed with half of the oxcodone the other ladies had received. Beckett theorizes that Charlotte had dosed herself as soon as she'd seen Castle and Beckett pull up, knowing they'd save her in time. Charlotte proclaims she's a victim, but Beckett reveals they have the receipt for Amy's car repairs, proving it was Charlotte who'd paid for the repairs and that it was Charlotte who'd been driving Amy's car that night. Further, Beckett has uncovered that Charlotte's real estate firm had handled Jamie Isaacson's reverse mortgage, and that that's how Charlotte had gotten Mrs. Isaacson's credit card information. With that, Charlotte is arrested. Back at the precinct, Castle and the team finish wrapping up the case and preparing to head home. Ryan chooses to look on the bright side, pointing out that Owen's family can finally have closure, but Esposito counters that it came at the cost of Amy and Kristina's lives, as well as Darren's marriage to Leslie. Beckett reminds them that they's why we need fairy tales, to remind us that happy endings are possible in the face of too much reality. And speaking of fairy tales, Castle informs Beckett that his mother's ready to give an encore performance of her play. So, they head back to Castle's loft to watch Martha put on her one-woman show. At one point in the play, Martha relates how she turned down an important role on Broadway for an even better role, that of mother. At this, Castle is touched, but then, Martha ruins it by telling the others that Castle wasn't always a good son.