Windom Earle has taken his first victim in the deadly chess game. Audrey tells Bobby they have to save Ben from his Civil War fantasy. Leo awakes and attacks Shelly, but Bobby is able to fend him off. Doc Hayward offers the true story of Little Nicky's past. Cooper reveals his rivalry with Earle: they were partners when Cooper fell in love with Caroline, Earle's wife. Earle went mad, killing Caroline and wounding Cooper. Mr. Marsh is killed. Donna confronts Evelyn. After a heated confrontation Mayor Milford and Lana end up lovers. Andrew Pakcard reveals himself to Pete, and tells him Josie has been working for his old enemy Thomas Eckheardt. Cooper suspects Josie in the murder of Jonathan. Eckheardt arrives in Twin Peaks, and Leo Johnson finds himself in the company of Windom Earle.