Admiral Eric Pressman (Terry O'Quinn) is posted to the Enterprise on a provisional basis to oversee the search for the wreckage of the missing USS Pegasus, the ship he commanded 12 years ago before it was lost (and, until recently, presumably destroyed, along with most of its crew) in a calamitous accident. Also aboard the Pegasus at that time was a young Ensign Riker, fresh out of the academy on his first starship assignment.
Pressman intends to find the Pegasus and its valuable and highly classified experimental technology, the details of which he has no intentions of revealing to Picard. The mission is chock-full of secrets, but time is of the essence — because the Romulans also have gotten wind of the whereabouts of this mysterious ship and are looking for it in an asteroid field. They can't be allowed to find it first. Riker, forced to confront ghosts from his past, is ordered by Pressman not to talk to Picard about the classified details of the Pegasus' disastrous fate.
Where "Parallels" was so clearly pure Brannon Braga, "The Pegasus" is just as clearly vintage Ron Moore, delving deep into the complicated and messy military aspects of Starfleet and the themes of duty, loyalty, and integrity. This episode is one of the most perfectly balanced episodes of TNG ever made, featuring a myriad of great elements in one cohesive package.
We've got ominous intrigue and conflict in the hidden agendas of Pressman and the Pegasus past: Just what were they building on that ship that went so awry, and why is everything so secretive? We've got great tension and backstory in the characterization of Riker and his questionable role in that event: Picard cashes in favors to get a classified report on the Pegasus and learns of an unthinkable mutiny. We've got an entertaining cat-and-mouse game with the Enterprise and the Romulan warbird racing to find the prize first: There are brilliant moments between Picard and Romulan Commander Sirol (Michael Mack), who hilariously threaten each other through the false facade of idle pleasantries. And we've got some terrific, atmospheric sci-fi FX sequences when the Enterprise ventures into the tunnels of an asteroid and finds the Pegasus, which lies embedded in a rock face because of the experimental technology that put it there. Oh, and in this otherwise serious episode, there's even a perfect comic note in the opening teaser's hilarious idea of "Captain Picard Day" (and Picard's grumbling about it).
And all through "The Pegasus" is Riker struggling with his conscience. He knows the story's secrets but has been forbidden to divulge them under orders from Pressman. Picard's ensuing conflict with Riker is serious and rare stuff as TNG goes, with Picard promising that if Riker's refusal to come clean in any way puts the Enterprise at risk, then he will have to "re-evaluate the command structure of this ship." For that matter, as the episode progresses, Pressman seems more and more like a villain waiting to be uncovered. (This many secrets can't be hiding anything good.) Terry O'Quinn is especially effective here; the villains in these sorts of stories believe themselves to be doing the right thing at the cost of acceptable collateral damage — in this case, the deaths of much of the Pegasus crew 12 years ago when the secret technology (ultimately revealed to be an illegal cloaking device with phase-shifting abilities that permit the ship to move through objects) blew up in their faces just after the mutiny that divided the crew. Riker, then a rookie, took Pressman's side in that mutiny because Pressman was the captain. But in the years since, Riker has grown to regret that decision as the morally wrong one.
And that's ultimately what "The Pegasus" is about — making the moral choice rather than "following orders." The themes of duty and truth are similar to the themes Moore used to great effect in "The First Duty," but they're employed to even greater effect here — because sometimes the truth of a messy situation only becomes clear with the passage of time and the gaining of maturity and perspective. Now, 12 years later, Riker is able to do what he couldn't do as a rookie by standing up to Pressman and revealing the truth that has been buried for so many years. It's one of the great showcases for Will Riker in TNG's run.