The episode opens up with an angry Victor Falco trying to re-create his psychic neuro-chemical. He apparently succeeds, but some of lab rats (that he's been experimenting on/with) then chew through some power lines hanging near the ceiling and the lab subsequently catches on fire. Falco is severely injured, but thanks to his neuro-chemical, he is able to telepathically communicate with the rats and survive.
Meanwhile, in the lair, the Turtles are consulting with one another and preparing to engage in a coordinated free-for-all with their sensei At first, Splinter manages to dodge all of their attacks and evade them, but then Leo (who is the very last one standing) finally manages to strike Splinter in the face, but hesitates (which Splinter points out to him afterward), and is once again defeated. After Leonardo's "victory", the boys then declare that they may not need Splinter to teach them anymore, which visibly perturbs their sensei (who has already gone back into his room).
Meanwhile, Falco, now severely deformed, living amid millions of rats, and now living underground, calling himself "The Rat King", plots to subjugate the city to claim it for the rats themselves, as the humans have been holding out on them for centuries. So, as planned, the rats quickly start to invade the city, causing huge panic and city-wide havoc. The "Rat King" then somehow becomes aware of Splinter through another form of telepathy, and decides to try and control him as he is a 'kindred spirit'. Rat King's words somehow echo within Splinter's mind, which causes the latter to scream and promptly fall to the ground. After the brothers come out to inspect their sensei, April calls Donnie, telling him that she is having a bit of a "pest problem" She was forced to abandon her bag of groceries and now tons of rats are ultimately forcing her to take refuge on the top of a telephone pole. The Turtles soon come to her aid and manage to escape thousands and thousands of rats while doing so. After they rescue her, Donnie quickly figures that someone or something must be controlling every single rat in the city at once, thus meaning that Splinter could be at risk also.
Back in the sewer lair, Splinter is fast asleep, but The Rat King has actually managed to get inside of his mind with hostile intentions. Falco is quick to remind him of his past losses: his family being slain, his mutation, and his inner-rat But Splinter mentally refuses to join him. The Turtles soon arrive home, and after Mikey pokes him several times just to make sure he's okay, Splinter then wakes up and tells the Turtles who the evil perpetrator truly is. Splinter says that The Rat King will not stop until he has complete control of the city and his mind; He then informs them of Falco's hideout, which he somehow was able to discover when Rat King was inside of his thoughts. April stays behind to carefully look after Splinter, while the Turtles head out to thwart all of the Rat King's plans.
The Turtles do find the junction underground, though are chased down by a gigantic wave of rats, whom they manage to escape from after a little while. Unfortunately, back in the lair, The Rat King tells Splinter that he is no longer needed for the Turtles (using what Leo had done earlier to exploit this) and that his path in life is now going to be determined only by the Rat King's hand. Finally, the fiend manages to take full control over Splinter and has rendered him helpless to defend himself in any way, shape, or form. Splinter then snaps and attacks April, who is kindly bringing him a cup of tea, but just when he is about to deliver the finishing blow with a weapon, he is then called to The Rat King's aid. The Turtles soon locate the hideout, but Falco's new, ghostly appearance is not the only revelation—Splinter is already there as well Rat King then breaks out in shrieks of sadistic laughter, and orders Splinter to attack the Turtles, but when Leo yells "Sensei, don't!, Splinter actually pauses for a brief moment However, this causes The Rat King to uncover his mask, revealing his off-putting face and his everlasting creepy eyes. Splinter then continues walking forward, and Leo is able to realize what is imminent. He hesitantly orders his brothers to take their own sensei down, but they end up having their butts easily whipped instead Donnie quickly comes to the conclusion that Splinter may have just been going easy on them for the 15 years that they've been alive.
Donnie, Mikey, and Raph once again all try their luck in attacking their incredibly skilled—and now utterly mind-controlled sensei, but they only find themselves quickly outmatched with suprisingly simple movements. Then, Leo duels with him. Splinter quickly knocks the katanas out of his eldest son's hands and prepares to kill him. Just when everything seems completely hopeless, Leo shows Splinter a photo of when he was a human (standing alongside his wife and his infant daughter), along with saying his real, human name for a change. When Donnie and Raph then pin Splinter down to the ground, Leo calls him "father" for the first time in a long time. The Rat King then tells Splinter to not listen to the Turtle That his place in life is now with Rat King ONLY. Once again, Splinter prepares to kill Leonardo but, suddenly, he bravely snaps out of his trance and starts running at the Rat King, whom he defeats within a matter of seconds. The Turtles all embrace their sensei at once, knowing that his true self is back. All of them then watch as the defeated Rat King is carried off by several dozen rats Mikey then vows to name the next villain, instead of allowing the guy to name themself.
Later, Splinter is seen meditating in the lair, when Leo comes in to check on him. Leo declares that, someday, there is a chance that he might become a greater Martial Artist than Splinter himself. Splinter replies that he has taught his sons everything that they currently know—he then quickly grabs Leo's arm and throws him against a wall before adding that he hasn't taught them everything that he knows. The episode concludes with Leo saying, "It's great to have you back, sensei", in a rather sarcastic voice.
The title of this episode is named after the original Rat King appearance in the comics which is in turn a reference to "I, Robot", a collection of short stories written by Isaac Asimov.
According to Kenny Byerly, the original episode production order was "New Girl in Town", "I, Monster (2012 TV series episode)", "The Alien Agenda"; US Nick chose to air them out of order and placed "I, Monster" before "New Girl in Town". 
"Leonardo: OK there's the plan: Donnie, you're gonna strike first. Donatello: No wait. You want me to come at Splinter? I'll get pummeled! Raphael: Well, getting pummeled is your speciality. Leonaro: Trust me. It's all in my plan to catch Splinter off guard. Michelangelo: "Don't take this the wrong way Leo, but against Splinter, your plans always get our butts whipped. Leonardo: OK new thought: Mikey, you attack. Michelangelo: "He took it the wrong way. Raphael: Enough talk! Let's do this!"
"Rat King: Why do you cling to this wretched life? Splinter: I am needed here. Rat King: By who? Even your so called "children" have begun to outgrow you. And soon you will be all alone. Come brother, we are your family now. Splinter: NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO!!!!!!!!!!!!!!!!!!!!"
"Donatello: April, now is not the best time. April: Donnie, it's Splinter. He's gone! Donnatello: Gone? Gone where? Splinter: Here..."
"Donnatello: Guys, I just came to a horrible realization. He's been going easy on us all these years!"
"Splinter: Remember, everything you know, I have shown you. But I have not shown you everything I know."