After Spooge, the male junkie, taunts his woman, she crushes his head with the ATM. The junkies return some meth and promise Jesse the proceeds of a stolen ATM, but the woman knocks Jesse out. Jesse, lying in wait for the junkies, discovers a small boy at their house. Meanwhile, at the DEA headquarters, Hank informs his boss about the mysterious blue meth being sold on the streets, and they begin an investigation about the supposed dealer who is selling the product, a man named 'Heisenberg.' Walt visits Jesse and demands retribution for their dealer being robbed (' Breakage'). All goes well until a junkie couple robs Skinny Pete.

Jesse rents a duplex apartment from Jane Margolis, who lives next door, and assembles a meth-dealing crew with his longtime friends, Badger, Skinny Pete and Combo. Walt confronts Skyler about the cigarettes. Meanwhile, a suspicious Skyler keeps her distance from Walt and smokes to relieve tension (' Down'). Walt eventually shares some of his remaining cash with Jesse. He breaks into Clovis's repair yard and sleeps in the RV, stealing it back after Clovis threatens to sell the cooking supplies. Jesse's parents, aware of the meth lab, force him to vacate his house. Walt returns home where Skyler quizzes him about the second phone (' Bit by a Dead Bee').Ī broke Jesse asks Walt for half their remaining money, but Walt refuses. Hank, interrogating Jesse, accuses him of working with Tuco, but releases Jesse when Tio refuses to ID him. To cover for their disappearance, Walt fakes amnesia and is hospitalized while Jesse removes meth evidence from his house, persuades Badger's cousin, Clovis, to tow away the Jesse and Walt escape and are hiding nearby when Hank approaches Tuco and kills him in a shootout (' Grilled'). Trapped in a desert hideaway, Walt and Jesse try to slip Tuco the poison, but his ailing uncle, Hector Salamanca, tips Tuco off.

Diane Pinkman tells Hank about Jesse's low-rider car, which Hank tracks to Tuco's place using LoJack.

Marie Schrader tells Skyler White that Walt might have a second cell phone and suggests Hank visit Jesse's mother. Hank briefs his DEA team about a raid on Tuco's headquarters, and then takes a leave of absence to search for Walt. Shortly afterwards, Tuco abducts Walt and Jesse at gunpoint (' Seven Thirty-Seven'). Hank Schrader sends Walt a cell phone photo of No-Doze and Gonzo, Tuco's other associate, dead in the junkyard. Jesse purchases a gun to protect himself from Tuco, but Walt proposes they kill Tuco with In an abandoned auto junkyard, Tuco Salamanca buys meth from Jesse Pinkman and Walter White, and then kills his henchman No-Doze for speaking out of turn.

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