Yugi has extended her crystal domain across the Earth, creating a dark and twisted reality that she plan to shape into the perfect world for her and Sasami to play together in. But when Sasami rejects her and joins the other girls at Tenchi's side, a devastated Yugi withdraws to her throne room. With the girls acting as backup, Tenchi must find and confront Yugi- but exactly how should he deal with an entity who is both a malevolent demon and a scared and lonely child?
With her servant Matori by her side, Yugi has dominated the Earth with her own crystalline reality, hoping to create a perfect world for her and Sasami to play in. But, to her horror and devastation, Sasami has rejected that idea, turning away from Yugi to stand with Tenchi and the other girls as they prepare to make a stand against the demon girl.
As Yugi tries to persuade Sasami to come to her, Sasami refuses, telling Yugi that there is no material item she can offer that could be worth more than a friend with a good heart, a friend that would do the right things and return the world to normal. Hearing this, an impatient Matori is ready to just go ahead and destroy Sasami and the others right away, but when she tries to prod her mistress into doing so, Yugi merely vaporises her unfortunate servant.
As her hurt feelings turn to anger, Yugi turn back to the group and launches a devastating attack. As Ayeka shields everyone from harm, Yugi retreats to her inner sanctum. Everyone is ready to go after her, but Tenchi tells them to let him deal with Yugi alone. He still feels responsible for everything that happened, and as heir to the Masaki clan's role as guardians of Earth, he wants to fulfil his duty and set things right.
Wishing him luck, the girls hand over their gems, and Tenchi recombines them, forming first the crystal pendant, and then the sword that he first used when Ryoko and the others came to Earth. Ready for the final confrontation, Tenchi charges up towards Yugi, who tries to keep him away by sending out waves of crystal demons. Fortunately, the girls had no intention of letting Tenchi go the whole way alone- and Ryoko, Ayeka, Mihoshi and Kiyone are on hand to take down the demons and clear a path for Tenchi. Watching from afar, Sasami wishes she could help too, but Washu tells her that she may have done so- by reaching out to Yugi in the first place.
However, even Washu cannot be certain about what will happen in the future. Katsuhito told her he was certain that the gentle-hearted Tenchi would find a peaceful way to end this conflict- after all, look how he drew six powerful alien girls into coming to live with him, turning them from potential enemies into good friends. Washu, however, is sure that the only way to deal with Yugi is to fight- and she worries that Tenchi may not have the strength for a physical battle.
Meanwhile, Tenchi has finally made it to the entrance to Yugi's inner sanctum, and the frightened and angry girl is quick to block it off with a wall of crystal. With a little effort, Ryoko is able to blast through the wall, leaving the way clear for Tenchi. As promised, the girls step back and let Tenchi go inside alone to deal with Yugi.
As Tenchi approaches her, Yugi becomes frantic, fearing that she will end up locked away in the cold and lonely emptiness, just as she was back on Jurai. Warning Tenchi to stay away, she tries to drive him back with a powerful energy blast. Fortunately, Tenchi is able to slice through it with his gem sword, and he continues to approach Yugi. As he finally reaches her, Tenchi slaps Yugi, snapping her out of her hysteria. As Yugi's armour drops away, Tenchi catches the girl, and lowers her to the ground. He explains to Yugi that her methods are not the right away to deal with her loneliness and misery- it would be a much better idea for her to just come over and make friends with everyone at the Masaki house! As she acknowledges Tenchi's words of comfort and forgiveness, Yugi loosens her hold on her crystal domain, and as it slips away, the normal world is restored.
Some time later, and everything is pretty much back to normal for Tenchi and the girls. Tenchi has moved back to Okayama, but despite spending only a semester in Tokyo, he made such an impression on his former classmates that they still keep in touch, sending letters joking signed "your girlfriend in Tokyo" (naturally stirring up endless paranoia for Ryoko and Ayeka). Life carries on much as it did before- but with one major difference. By her own choice, Yugi has been sealed up until she can mature and become a better person- only now she is sealed in the Masaki shrine, and her best friend Sasami visits her to give her regular updates on the world outside.
Sitting together in a tree one afternoon, Tenchi and Ryoko cannot help but ponder recent events. Tenchi wonders if sealing her away again was the right thing to do, but Ryoko reminds him that it was Yugi's own decision, and in time she will be ready to awaken once more. And, when that time comes, it may well be that Yugi will have grown to resemble her shadow- Sakuya- leaving Tenchi with an interesting decision to make. As Tenchi admits that he isn't sure what will happen when that time comes, Ryoko claims to be completely sanguine about the idea of Tenchi being with another woman- although then again, she would get over it much better if Tenchi would just give her a kiss!
Even as Tenchi seems about to contemplate it, however, Washu pops out of the trunk of the tree- it seems that this is the new terminus for her latest dimensional tunnel! And even as Ryoko gets annoyed with Washu for spoiling her moment with Tenchi, all of the other girls pop out of the tunnel as well! Tenchi's friends in Tokyo may think that their friend has returned to a quiet life in Okayama, but in reality, it is quite the opposite- and, in all honesty, Tenchi wouldn't have it any other way.