Suho, Banryu and the others are arrested for fighting in the sacred place, Najeong. The only way for them to live is to join Hwarang, and they all agree to do it though some of their fathers hate the idea. Meanwhile, the Queen plans to train Master Ahnji's son to be the King's loyal dog by making him a Hwarang.
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Chang Joong and Yi Gyeom meet the king to recommend Prince Yeoning as the Crown Prince. Meanwhile, Moon Soo and his colleagues notice that Yeo Ji isn't back after she left to talk to the students. It turns out the assassins sent to kill Prince Yeoning were ordered by Prince Milpoong and not Min Jin Heon. The widowed Queen recommends Prince Yeoning, and the king, after some doubt, orders Prince Yeoning be made Crown Prince.
Prince Yeoning returns to his former colleagues Park Moon Soo and Yeo Ji and tells them he was behind the investigation on exam corruption. Prince Yeoning is now determined to become king. But the Minister of Personnel meets with the king and tries to persuade him otherwise. Meanwhile, the Patriarchs manipulate public opinion so the exam corruption case won't attract too much attention. And the Saganwon is out to stop the king from putting pressure on the Patriarchs.
Yeo Ji and her colleagues find out that Prince Yeoning had been supporting them all along. It's finally the day the exam results are announced, and Moon Soo fails to find his name on the list. He is certain that there is corruption going on surrounding the state exam. Inspector Yoon Hyeok knows about the corruptions but can't find a way to investigate them. This changes when he meets Park Moon Soo.
The Crown Prince has become king but does not win respect because of a lack of an heir. He is powerless at court. Meanwhile, Prince Yeoning meets the Minister of Personnel to tell him that Prince Milpoong probably killed Prince Yeonryeong, but the Minister is only interested in solidifying political power. The Patriarchs scheme with prisoners and let them escape, but Prince Yeoning sees through it.
King Sukjong calls the Chief Inspector and orders him to help him make Prince Yeoning king. Meanwhile, the Patriarchs have decided to support Prince Yeonryeong. The Minister of Personnel persuades Prince Yeoning to withdraw his testimony and indict Jeong Seok for instigating false testimony. Prince Yeoning feels hopeless about the whole situation and has to testify again.
Prince Yeoning decides to testify at the Supreme Court of Saheonbu. He confesses that he substituted for Tae Pyeong at the state exam and asks to be exiled for this crime. The officials, however, do not want to believe his accusations of Prince Milpoong. The Head of Saheonbu decides to arrest Prince Milpoong, and everything seems to go as planned.
Aro finds out that Master Youngshil has been buying all the available medicinal ingredients for the epidemic so that he can sell them at a much higher price when it spreads further. Seonu, Jidwi, and other Hwarangs sneak into Master Youngshil's house to steal the medicine while Master Wehwa draws his attention.
Now, everyone thinks that Seonu is the King of Silla and he will change the world after taking his throne. Threatening to kill Aro, the Queen forces him to continue pretending to be the one. Meanwhile, Jidwi asks Aro to run away together so that he can be free from this mess and have an ordinary life with her.
In order to save Aro, Seonu claims himself to be the king of Silla. The Crown Prince of Baekje plans to kill him brutally and take over Silla, but Seonu suggests to have a sword fight and to release them if he wins.
The Crown Prince of Baekje offers Princess Sookmyung a wedlock to keep peace between two nations. He also receives a secret letter that says the King of Silla is within the delegation. In order to find out who the faceless King is, he threatens to kill Silla hostages if the King doesn't reveal himself.
To maintain their alliances with Baekje, the Queen and the officials decide to send the Princess and a few members of Hwarang to see the Crown Prince of Baekje. It is Hwarang's first mission to escort the Princess as the amity delegates, but it is also dangerous that they might not be able to return safely.
The princess wants the Hwarangs to have a bloody fight as if they were in a real war, but they only pretend to spar because they do not want to harm any of their colleagues. Suspecting Seonu to be the King, Master Youngshil suggests a match between his guard and Seonu to see how Queen Jiso reacts.
They begin their training as members of Hwarang, but some of them are annoyed by a half-breed, Seonu, for being in the same group. Especially, Banryu is disgusted that he insults Seonu in every way. He tries to hold in, but starts the fight at last when Banryu talks bad about Aro.
The selected young masters are invited to attend the appointment ceremony of Hwarang. Queen Jiso feels shocked and betrayed to see her son, Sam Maekjong at the ceremony because she has worked so hard to protect him until now and his appearance is against her will. However, the King has decided to introduce himself to the world through joining Hwarang.
Suho, Banryu and the others are arrested for fighting in the sacred place, Najeong. The only way for them to live is to join Hwarang, and they all agree to do it though some of their fathers hate the idea. Meanwhile, the Queen plans to train Master Ahnji's son to be the King's loyal dog by making him a Hwarang.
Master Ahnji offers Moomyung to stay in his house and pretend to be Seonu, his son and Aro's brother. After hearing this could be Mak Moon's will, Moomyung agrees to stay, but he feels so bad because it seems like he's taking away his best friend's place. Aro is still suspicious if he is really her brother, but she's happy that her brother is finally back.
Mak Moon gets killed by the Commandant just because he has seen the face of the King. Moomyung gets furious and decides to take revenge on those who killed his best friend. Meanwhile, Master Ahnji hears the news about his son and searches everywhere in the capital all day, but it is too late when he finds Mak Moon dying due to the severe injuries.
Moomyung decides to enter the capital with Moon to find Moon's family even though the capital is only allowed to those with entry permits. Their only clue is Moon's necklace, but they ask around to find at least one person who knows something about it. Meanwhile, Queen Jiso offers Wehwa to be the teacher of a new group consisted of True Bone young males.
Kisan is shocked to hear ghosts are killing palace staff Lee Rin and Do Ha vow to stop them. Do Ha sees her sister Yeon Ha's face superimposed on Mo Yeon Wol, preventing her from being harmed.
Jo Sang Heon cannot distinguish the real Do Ha from the fake one, as both bear the Night Watchman's mark and the magic reveals no ghostly energy. Meanwhile, Kisan orders tax hikes and more manpower to speed up the pagoda's construction.
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