The episode is set in Utah in the year 2012, in the underground bunker owned by Henry van Statten, a billionaire collector of alien artifacts. After one of his exhibits, "the Metaltron" (actually a dalek) escapes, the Doctor races against time to stop it from surfacing and wreaking havoc against humanity.
The TARDIS is drawn off course by a distress signal, and materialises in a bunker in Utah, 2012. The Doctor and Rose Tyler find that the bunker is a museum, full of alien artifacts. An alarm is immediately set off, and they are taken to see the owner of the Vault — Henry van Statten, a billionaire collector of alien artifacts. Impressed with the Doctor's extraterrestrial knowledge, he invites the Doctor to see the "Metaltron", a creature he claims is the last of its kind. The Doctor enters the "Cage", where the creature is held, and begins to speak to it. The Doctor realises it is a Dalek, and attempts to kill it to purge the Dalek race forever, before being stopped by van Statten's guards.
Meanwhile, Adam Mitchell is showing Rose around the base. Adam shows her the Dalek, being tortured by a technician to force it to speak. Sympathetically, Rose asks to be taken down to the Cage to help the Dalek. Rose then touches the Dalek casing, which immediately absorbs her DNA and background radiation (a radiation that is picked up in mass quantities from time travel, and is the Daleks' sole power source). It escapes from its cage and downloads the entire internet, realizing that it is the only Dalek left. In response, the area is evacuated, and guards focus fire upon it, to no effect. The Dalek demands to speak to the Doctor, and tells him that it was able to regenerate its casing, but was unable to find any other Daleks or orders, and will follow the default function: destruction.
As Rose and Adam are escaping from the Dalek, the Doctor tries to stall to save them. Adam escapes, but Rose is cornered by the Dalek and is seemingly exterminated. Horrified, the Doctor blames van Statten for everyone's deaths. However, the Dalek has not killed Rose, as her DNA is making it hesitant. It instead negotiates, trading her life for access past the bulkheads which are obstructing its way. The Dalek then travels to van Statten's office, and is about to kill him before Rose intervenes and offers the Dalek its wish: freedom.
On the highest level of the museum, the Dalek creates a hole and feels sunlight for the first time. The Doctor arrives, gun in hand, and orders Rose to move. Rose refuses; the Dalek is changing, as it could not kill her or van Statten. Appalled at his own actions, he lowers his weapon. Both he and the Dalek realise that the Dalek is mutating further, and is becoming unable to conform to the Dalek objective. It asks Rose to order its death, and after being given the order, annihilates itself.
At the end of the episode, van Statten's assistant Diana Goddard orders van Statten's mind wiped and the vault filled with concrete. At the TARDIS, the Doctor ruefully observes that as the last survivor of the Time War, he "wins". Adam comes by, telling the Doctor that Goddard is sealing the base. Rose invites Adam aboard the TARDIS, which he enters with a puzzled expression before it dematerialises.
The museum's display items feature the arm of a Slitheen (Raxacoricofallapatorian) from Aliens of London, which Rose recognises, and something that the Doctor refers to as "An old friend, well, enemy… " – it is a Cyberman head (from Revenge of the Cybermen, but labelled on its display case with reference to The Invasion).
The call sign for van Statten's personal helicopter was "Bad Wolf One", a recurrent phrase throughout the first series. An excerpt from the cold open is used in "Bad Wolf", where Rose recalls where she had encountered the phrase before.
The script went through several changes. The story itself was initially called "Creature of Lies", and Van Statten was originally called Mr Duchesne. For a short period of time, Adam was van Statten's son, but Shearman decided against it. The most notable change to the script happened when the Nation estate, holders of the rights for the Daleks, blocked the use of the Daleks due to the BBC licensing them out too much. The changed story, named "Absence of the Daleks", contained an alien akin to a child who kills for pleasure, which eventually evolved into the Toclafane from "The Sound of Drums" and "Last of the Time Lords". Fortunately, the BBC were able to secure the rights from the Nation estate, and at the same time gave the episode its final name, "Dalek".
When it was released on DVD, British Board of Film Classification (BBFC) gave the episode a 12 rating, because of the scenes where the Doctor is seen to torture the Dalek. The BBFC stated:
"We are concerned about role models for children using the sort of tactics that Doctor Who used against the Dalek. If that was transferred into the playground it would be something we would want to tackle."
The episode was nominated for the 2006 Hugo Award for Best Dramatic Presentation, Short Form along with other Doctor Who episodes "Father's Day" and "The Empty Child"/"The Doctor Dances". The stories came third, fifth, and first, respectively.