The Waynes leave a musical and cut through Crime Alley on their way home. A man with shined shoes approaches and mugs them at gunpoint. After taking Thomas' money and Martha Wayne's pearl necklace, he kills both of them as Selina Kyle watches from a fire escape. He spares Bruce Wayne.
Solving the case
Homicide detectives Jim Gordon and Harvey Bullock are put on the case, and they head to the Theatre District where the double murder occurred. At first, Harvey wants nothing to do with it, knowing that if they don't close it fast it could cause city-wide panic. Gordon makes a promise to Bruce that he'll find the killer.
After interrogating several muggers, Bullock and Gordon meet with GCPD forensic scientist Edward Nygma for a debriefing on the murder weapon. With no serious leads, the two decide to visit Fish Mooney, an underling of Don Carmine Falcone who controls the Theatre District. After talking to Fish about the murder, she agrees to look into it. 
During the night, Gordon gets a call from Bullock, who asks him to join him at the corner of 4th and Grundy, as he's found a lead. In the morning, the two arrive at the Peppers' apartment on word from Mooney. Ivy Pepper answers the door, and her father Mario Pepper is questioned. Spooked, Mario flees. Jim and Harvey give chase.
Mario physically confronts Gordon after running through a garment factory and a Chinese restaurant's kitchen. As he prepares to stab him, Bullock intervenes and fatally shoots him. They then go back to Mario's apartment, where they find Martha's pearl necklace. At the GCPD headquarters, both detectives are congratulated, and the story of how they solved the Wayne murder appears in the newspaper. 
Dirty little secret
Fish's umbrella boy, Oswald Cobblepot, meets with Renee Montoya and Crispus Allen of Major Crimes Unit to reveal that Fish framed Pepper by planting the pearl necklace in Pepper's bag, shortly after she met Bullock and Gordon. Gordon begins to dig for the truth.
As Renee tells Barbara Kean what really happened, Gordon confronts Bullock. Harvey denies any corruption, and tells Jim that even if he's right, they could both lose their jobs for killing an innocent man. Gordon goes to Fish for answers. Realizing that Gordon is a growing problem, Mooney knocks Jim out and takes him to a plant where she "takes care of problems". Bullock notices Jim is missing and goes to Mooney's plant. Bullock warns Fish that it's actually MCU who's on her trail, and that if she kills Jim, Harvey will retaliate. Unimpressed, Fish orders Bullock to be killed as well.
Fortunately for Gordon and Bullock, the two detectives are saved by Don Carmine Falcone. Don Falcone reveals to Jim that he was friends with his father, and that it's the only reason he saved Jim and Harvey's lives. Falcone claims that they weren't the ones to kill the Waynes, and that he sent Fish to plant the pearls on Pepper so that Gotham could have a scapegoat. He also tells Gordon that even if he managed to stop the corrupted officials, it would only make things worse.
Fish eventually finds out Cobblepot was the one to snitch on her and beats him with a bat, severely injuring his leg and forever crippling him. Falcone gives Jim the order to kill Cobblepot in order to eliminate the only witness in the Wayne case, and for Gordon to prove himself to Gotham's corrupt leaders. Instead, Gordon fakes Cobblepot's death by pushing him into the Gotham River. Jim admits to Bruce that his parents' killer is still out there, but promises to continue the case in secret.