Santa Barbara's police department hires the new local psychic whiz, Shawn Spencer, to assist them with a kidnapping case.
At the Regional Spelling Bee, a young boy collapses onstage. Then, when the Spellmaster is about to make a big announcement, he falls to his death over a railing. Shawn and Gus are put on the case. They believe the Spellmaster was poisoned, but can't prove it on their own. They must enlist Shawn's father to help prove their theory before the Bee is finished and all the suspects go back home.
Shawn and Gus crash a wedding in order to find out what happened with a stolen engagement ring.
A thief dies and his wife needs help tracing his steps to where he hid money before he died. Shawn is asked to use his psychic powers and talk to his dead spirit.
Shawn pretends to get clues from a victim's cat when he investigates a string of suicides connected to a stress-line calling service.
Shawn and Gus go to see Lassiter rehearsing a Civil War reenactment. However, when one of the soldier's "deaths" turns out to be real, Shawn and Gus are determined to get on the case.
A psychologist is killed and Lassiter will not let Shawn and Gus help out with the case. They are disappointed, but soon their time is taken up by a man who believes a ghost is trying to kill him. Although Shawn does not believe in ghosts, he is interested in this case, especially when it seems it might be related to the murder.
Chief Vick and Detective Lassiter are out of town, leaving Juliet to to deal with a mother who's worried about her missing son. Gus and Shawn come to help, and realize the boy went to a comic book convention. Once there, they discover the boy's secret identity and find that he could be in serious danger. Meanwhile, Chief Vick gives birth to a baby girl with the help of Lassiter.
Henry's old boss, Captain Connors, and his daughter Trish come to the Psych agency for help. Connors suffers from early Alzheimer's. He knows he solved a murder but can't remember anything about it. Shawn and Gus take the case.
Shawn approaches a drunk and depressed Lassiter who confesses that he has doubts about his own ability as a detective. Shawn decides to secretly try and help him solve the case of a healthy astronomer whose death doesn't quite add up.
Lassiter sticks Shawn and Gus with a case where a dead man shows up naked at the police station claiming to have been abducted by aliens. Shawn's investigation soon takes him into the strange world of speed dating.
A woman sleeps with a local weatherman. He is found dead and she is charged with his murder. Shawn sees her and is convinced that she didn't do it. He finds a way into her case by becoming a consultant to the defense.
Shawn has to get Gus away from a corporate retreat so that they can investigate the death of a tennis star. Meanwhile Henry and Lassiter become friends after a fishing trip, leaving Shawn feeling slightly jealous.
Henry's old friend won't call the police when his son goes missing. Henry sends him to the Psych office in hopes that Shawn and Gus will convince him to go to the police. Instead, they take on the case themselves which leads them to the underground world of poker. Shawn uses his skills at reading "tells" to help the son get out of trouble. Meanwhile, Juliet plans a surprise birthday party for Lassiter with disastrous results.
As children, Shawn and Gus witnessed a troubled girl jump out of a window at Wispy Sunny Pines mental institution. Ten years later, a soroity girl has died by jumping out the same window.