Plot summary
In 1987, Shawn and Gus witness an insane woman jump from a window of a mental institution; in the present, a girl falls to her death through the same window after being chased. Detective O'Hara is working undercover in the girl's sorority, and Shawn and Gus are asked to help. While at the sorority house, they are attacked by the girl's "ghost", which turns out to be man-made. Meanwhile, Detective Lassiter is assigned to a trigger-happy elderly rookie. Shawn discovers that the girl's longtime best friend is likely the "phantom". Gus discovers that her death was likely an accident.
Shawn realizes that one of the sorority sisters is the target of the "phantom", but she is killed before he can get to her. Several of the sorority girls admit that they accidentally killed the girl, but are being attacked by someone. Shawn visits the girl's friend's house, and realizes that she is the killer. She invites O'Hara to a candlelight vigil at the mental institution, where she tries to kill her. Shawn, Gus, and Lassiter arrive at the last second to help Juliet.
Credits
Adapted from Wikipedia contributors, Psych season 1. HTML formatting and reference markers removed.