Razor takes place during Commander Lee Adama's first days as commanding officer of Battlestar Pegasus (during the period originally covered in the second half of season 2; after the episode "The Captain's Hand" but before "Lay Down Your Burdens") and uses flashbacks to show Admiral Cain's orders during and shortly after the Cylon attack, as well as events occurring on the final day of the first Cylon War. Cain's actions in the wake of the holocaust are connected to the present by Kendra Shaw, self-described as Cain's legacy.

Events of the final day of the first Cylon war are centered on Admiral Adama, then a Viper pilot, and Admiral Cain, a youngster at the time. Flashbacks of Adama discovering a lab housing the early Cylon experiments on humans as well as the first Cylon hybrid and Admiral Cain abandoning her little sister during a Cylon invasion of Tauron both end as the first Cylon war ends immediately after the life-changing events, leaving each character hanging somewhat (Adama is unable to free the surviving prisoners and Cain cannot find her sister). These are shown to be driving forces for the actions of both admirals as the show continues. Cain goes on to teach Shaw that you have to become a razor to survive during war while referring to her pocket knife, which later becomes Kendra's and then is passed on to Starbuck at the end of the show. Admiral Adama teaches his son Lee a different lesson: that they cannot become butchers.

Lee Adama's first priority as Pegasus commander is to restore trust and integrity to the troubled command he has taken while preserving some continuity in the leadership that had evolved under Admiral Cain. He picks Kendra Shaw as his executive officer, promoting her to major, despite the stark contrast between Cain's fulsome praise and subsequent Pegasus officers' complaints about her performance. First boarding Pegasus less than an hour before the Cylon attack on the colonies, Shaw follows Admiral Cain's order to make a risky "blind jump" that saves the ship from destruction at Scorpion Fleet Shipyards.

After Pegasus receives reconnaissance information that all the colonies have been destroyed, Cain delivers a rallying speech inciting the crew to war for the purpose of revenge. The crew responds by chanting "So say we all" throughout the ship; the still-unexposed Number six agent Gina Inviere awkwardly joins in.

Commander Lee Adama's first mission as commander is a search and rescue mission to retrieve a lost science team. Antiquated Cylon Raiders from the first war appear and attack Pegasus. Simmering bitterness between Starbuck and Shaw is exacerbated when Shaw endangers Starbuck and her wingman in order to defend the Battlestar. Both pilots land safely, though Starbuck has to destroy a Raider that follows her into Pegasus.

Later, during a heated exchange, Shaw reminds Starbuck that defying authority is a risky proposition aboard Pegasus, recalling how Cain shot her executive officer, Colonel Jurgen Belzen, for refusing an order to attack a Cylon staging area filled with an unexpectedly strong force of Raiders. It is during this mission that Gina Invierre helps Cylon centurions board the Pegasus and Shaw discovers Gina's true identity. It is hinted that the sadistic torture inflicted on Gina by Cain's orders may have been influenced by the burgeoning romantic relationship between the Cylon and the admiral. When Shaw is promoted to captain by Admiral Cain, Cain reminds her troubled protegé the Cylon "tricked them all."

Viewing the wreckage of the raider, Sharon Valerii notes that Cylon lore tells of a group of original centurions tasked to guard the first hybrid constructed by the Cylons as a result of their human experiments. Admiral Adama then recalls his rookie mission as a Viper pilot, when he encountered that hybrid and saw what the Cylons did to their human captives in the course of their research. Admiral Adama concludes that the Cylons must still be pursuing the experiments, with the captured science team as new test subjects.

Commander Lee Adama approves a plan to use Pegasus to find the Basestar, lure the Cylon Raiders away from it, and then launch a rescue team, including Starbuck and Kendra Shaw, and outfitted with a nuclear warhead, in a Raptor. Admiral William Adama transfers his flag to Pegasus to counsel his son on his first command. The diversion succeeds; the rescue team boards the Basestar, but lose their Raptor.

As the rescue team searches the Basestar, the Cylon hybrid can be heard speaking in more coherent phrases than its more-modern counterparts. It repeatedly utters the words "All this has happened before, and will happen again."

The science team is found and partly rescued, but the rescue team comes under fire from Cylon Centurions. While the team manages to evacuate the Basestar in a second Raptor, the nuclear warhead is damaged and has to be detonated manually. Wounded, Shaw remains behind to detonate the warhead, and comes face to face with the Cylon hybrid.

The hybrid offers absolution to Kendra, who is haunted by the fact that it was she who fired the first shot in the massacre aboard the civilian ship Scylla as part of an operation to conscript civilians for the Pegasus. The hybrid then tells her that "Kara Thrace will lead the human race to its end, she is the herald of the apocalypse, the harbinger of death; they must not follow her." Shaw tries to relay this information to Lee Adama, but is stopped when the Cylons jam communications. Her final act is to detonate the nuclear warhead, destroying the Basestar.

On Galactica, Admiral Adama reflects on Cain's legacy and proposes a posthumous commendation for Kendra Shaw, over his son's protests that she and other members of Admiral Cain's crew butchered innocent civilians. They close their arguments, however, noting that their logs will lay the foundation for all of history to come, and Lee agrees to consider the commendation.