The TARDIS arrives on the planet Terra Alpha, where the Seventh Doctor and Ace discover a society in which sadness is against the law - a law enforced zealously by the brightly uniformed Happiness Patrol. The planet is ruled by Helen A with the aid of her companion, Joseph C, and her carnivorous pet Stigorax, Fifi.

The penalty for those found guilty of unhappiness is death in a stream of molten candy prepared by Helen A's executioners, the robotic Kandy Man and his associate, Gilbert M. The time travellers help foment rebellion amongst the downtrodden population and the subterranean Pipe People — the planet's original inhabitants — and Helen A is overthrown.

Joseph C and Gilbert M escape in a shuttle, while the Kandy Man is destroyed and Fifi killed. Helen A finally realises the hard way that happiness is nothing without the contrast of sadness.