The “It’s a wonderful life” themed Psych found Shawn discovering what life might be life if he had never returned to Santa Barbara. After evidence in a high profile case is thrown out due to Shawn’s unconventional methods, he finds his position at the Police Department dissolved and his father fired for failing to keep Shawn in check.

In a moment of anger, Henry wonders, “…what our lives would be like if you had stayed wherever the hell you were five years ago and never come back to Santa Barbara,” sending Shawn on a journey of self discovery with his super-ego Tony Cox.

Henry is bum drinking lactose-free milk, Gus is married to a material girl, the department is run by Carlton like a civil war military regime and Juliet is still working the streets as a cop in Miami.

The dream gives Shawn a whole new way to catch Czarsky. They find out that there was more to the footage that captured Shawn in the act that got him fired than met the eye, and Shawn, Gus, Lassiter and Juliet find themselves running against the clock to diffuse a bomb.
When the team arrives at the scene, Shawn makes a speech that rallies Czarsky’s victims together to testify against him and get their lives back, also giving the team the evidence they need to put Czarsky away for good.

Chief Vick allows Shawn to come back and gets her on board to get Henry’s job back, too.