The episode takes part on the day of the opening ceremony of the 2012 Summer Olympics in London, almost exclusively on a fictitious cul-de-sac named after the British athlete Kelly Holmes. While originally only intending to visit the ceremony, the Doctor and Rose investigate a child with the ability to make people disappear by drawing them.
The source of the problems is a small girl, Chloe, who is able to cause people to disappear by drawing them. The Doctor is able to deduce from detection of residual energy and the carbon nature of a scribble that had attacked Rose that the problem is coming from an alien influence.
Intrigued, the Doctor investigates and through talking to Chloe, he discovers that the disappearance is related to the Isolus, an alien life-form, who had befriended Chloe as she had a troubled childhood including an abusive father. The Doctor warns that the Isolus is desperate for love too, and will use the billions of people watching Olympic opening ceremony to renumber its family.
The Doctor returns to the TARDIS, which locates the Isolus pod to the Close. However, the Doctor and thousands at the Olympic Stadium start to disappear, leaving Rose to dig the pod up (to Kel's protestations). Rose realises that she needs to offer the pod heat, which she does by throwing the pod towards the torch, which had subsequently became a moral beacon, that is passing the Close.
As the missing children start to reappear, Rose realizes that so will the demon-like drawing that Chloe had made of her father. Rose and Chloe's mother are able, though, to calm Chloe enough to destroy him.
As the torch-bearer approaches the Olympic Stadium, he staggers, but the Doctor completes the run and lights the Olympic Flame, allowing the Isolus to return home.
As the Doctor and Rose walk off to watch the Games, Rose remarks that however hard they attempt, nothing will ever split the two of them up. However, the Doctor does not seem so sure, as he surmises that a storm is approaching.
Due to Fry's script being dropped, production of some episodes of the second series had to be rescheduled, with "Fear Her" being produced alongside "The Idiot's Lantern". The episode was filmed during late January and early February 2006, with the cold temperatures experienced during filming being explained in the plot as part of the Isolus' endothermic nature. The majority of the episode, including exterior shots and Chloe's home, was filmed in the Tremorfa area of Cardiff, with a majority of the remainder filmed in the Doctor Who studios in Newport. Dame Kelly Holmes, who was referenced in the episode, was considered for the part of the torchbearer, but was committed to Dancing On Ice at the time.