Starts automatically after the end of the quest " Forsworn Conspiracy ". You'll be stripped off of everything you own. Walk out of the cell and speak to the prisoner sitting near the fire. Also, ask him about the shiv and he tells you how to get one.
Go south from this room and speak to Grisver . He'll get you a shiv, but he asks for Skooma in return. Follow the marker until you find Duach. Obtain the Skooma from him and return to Grisver to get your shiv.
Return to the main room and look east to find an Orc called Borkul the Beast . Speak to him and he asks for a shiv. It's better to brawl him (Alternately you can PERSUADE him to let you by; my speech was at 79 and I was successful). When you've won, go through the gate and speak to Madanach . After the chat, locate Braig and speak to him. After hearing his sad story, return to Madanach and speak to him.
He asks you to go kill Grisver for being a snitch. Use the shiv to quickly kill Grisver, then follow Madanach. After the speech, follow Madanach and the other into Markath's Ruins. In here, simply follow the path while killing the Frostbite Spiders and Dwarven Spheres. You'll soon enough regain your equipment, Gold and you'll also be given:
**- Helmet of the Old Gods: Increases Magicka by 30.
Armor of the Old Gods: Destruction Spells cost 15% less to cast.
Gauntlets of the Old Gods: Bows do 20% more damage.
Boots of the Old Gods: Sneaking is 20% better.**
Go out to Markath to find Madanach and Thonar arguing. After a while, they start attacking each other and the quest ends. You don't have to help either side and can just sit back and watch (which is what I did and the Forsworn went through the city and killed every guard then disappeared...).