Data is relieved of duty, but when Troi is brought to sickbay for treatment, Crusher discovers an "interphasic" alien parasite, invisible except in a special scanner, clinging to her shoulder in the exact place she was stabbed. Crusher goes on to discover that the same parasites are infecting all of the crew. Picard and Geordi hook Data up to the holodeck so they can see his nightmares for themselves, and they figure out that his subconscious detected the parasites and generated the nightmares to warn him. Using information gained from his dream, they're able to send out an interphasic pulse from a chip in Data's brain that hurts the parasites and chases them off the ship.
Tropes provided by "Phantasms":
- Abhorrent Admirer: Ensign Tyler has a crush on Geordi, which he really doesn't reciprocate.
- All Psychology Is Freudian: Taken to its natural end as Data consults a holographic Dr. Sigmund Freud to analyze his dreams.
- An Arm and a Leg: The first dream ends with the workers tearing off Data's hand, leg, and head.
- Be Careful What You Wish For: Picard wanted to avoid the annual admirals banquet. He gets a reason to avoid it, in the form of the Enterprise failing to start. That is before he learn about the parasites that could kill the crew. Downplayed since once the danger is over he is grateful that fixing the engine will take so long he will miss the banquet.
- Big "NO!": Troi screams this as she is being stabbed by Data.
- Blatant Lies: Picard assuring Nakamura that he really is looking forward to the Admirals' Banquet.
- Body Horror: Much more than usual for Star Trek. Invisible parasites clinging to the arms and faces of every crew member, Data being ripped limb from limb, Data hallucinating fanged mouths on other crew members' bodies, Crusher drinking from a straw in Riker's head, Troi turned into a cake that screams and pleads as Data cuts into it...
- Brick Joke: After Data's dream involving the Troi-cake, Troi gets her payback with a Data-cake.
- Catapult Nightmare: Data's reaction to being violently disassembled in the intro dream.
- Crying Wolf: Nakamura doesn't believe Picard when he tells him the Enterprise is in trouble because he's made many excuses for years.
- Dream Episode: Data starts experimenting with his dream program and begins having nightmares that turn out to be because alien parasites are attacking the ship.
- Dream Intro: Data's first nightmare, with more to come.
- Dream Spying: Data's dream view of what's happening to the entire ship. Complete with the aforementioned Catapult Nightmare at the end of the dream intro.
- Epic Fail: The new warp drive. Geordi starts it up, Picard says "Engage"...and the Enterprise shuts down.
- Faking Engine Trouble: Played With; Admiral Nakamura begins to suspect Picard is pulling this since he's supposed to be at the annual admirals banquet, and has been ducking it for years, but the Enterprise really is having trouble with a new warp core which still has a few bugs to work out, literally. Picard is in no hurry to have it fixed but as the delays mount up, Nakamura finally offers/threatens to have them towed in. Picard firmly states that they will resolve the issue and arrive on schedule. Ultimately they miss the banquet. And Picard's just fine with that.
- Freudian Couch: Naturally appears in the Sigmund Freud holoprogram.
- Hell Is That Noise:
- That high-pitched noise that Data makes is this to the dream miners, providing a needed clue for getting rid of the invisible parasites.
- The phone ringing is this for Dream!Riker.
- Literal-Minded: Freud scolds Picard for this when the phone in his office starts ringing.Freud: Answer it.
(Picard reaches for the phone)
Freud: Nein, nein, nein! Do not be so literal. When I say "Answer it", I mean "Respond to it". To them.
- Meaningful Name: The planet where the new warp core and the interphasic parasites came from was Thanatos VII. "Thanatos," of course, is a Greek word that has to do with death.
- Mental Picture Projector: Data is hooked into the holodeck so Geordi and Picard can see Data's dreams, after Crusher discovers that "mouths" in Data's dream signify places where the crew are being consumed by the parasites.
- Nightmare Fuel: The invisible parasites feeding on the crew. Bonus points for being an In-Universe variation, as they're the cause of Data's nightmares.
- Not So Above It All: Picard hates the Admirals' Banquet, so much so that for the past six years he has been weaseling his way out of attending. Once the parasites are dealt with he's actually grateful that the repairs to the engines mean he will miss it.
- Reality Ensues: Picard has been uses excuses to got out of attending the admiral's banquet for six years so the one time he actually has some real trouble going on, Nakamura doesn't believe him.
- Sarcasm Mode: Picard remarks about what a shame it is that the Enterprise's warp problems will keep him from attending the boring Admirals' Banquet.
- Shout-Out: Data's dream with Troi as a cake is similar to the music video for Tom Petty's "Don't Come Around Here No More".
- Talking in Your Dreams: Data talks with manifestations of his subconscious (Sigmund Freud) and the parasites (the workers), to get to the bottom of what's happening to him and, later, the ship and crew.
- The Day the Music Lied: The second time the crew tries to leave for the conference. The music starts swelling into the usual warp-jump theme as they prepare for said jump, only to immediately stop as the engines do the matter/antimatter reactor equivalent of a choke and shut down again.
- Uncomfortable Elevator Moment: It doesn't get much more uncomfortable than getting stabbed.
- Understatement: When Geordi figures that Data's nightmare must have been strange.Data: "Strange" is not a sufficient adjective to describe the experience.