Having Haunter at his side, Ash returns to Saffron City with Misty and Brock. Brock is a little wary of the Ghost Pokémon, however, and keeps his distance. Misty tells him that she thinks Haunter is cute, and Haunter licks her. This however, paralyzes her, and Ash scolds him, making him sob in sorrow. Ash comforts him, then asks him if he'll help him beat Sabrina. Haunter agrees, and they all rush to Saffron City.
They reach the gym, and Ash remembers how badly he was beaten last time. He looks around, and notices that he and Haunter are alone. He looks around, and sees Misty, Brock, and Pikachu standing at the side of the road, cheering. Ash yells at them, asking them if they'll at least come with him. Misty reminds them of how they were shrunk, but Ash reassures them, saying that Haunter will beat Sabrina. Ash sends out Charmander, Squirtle, and Bulbasaur, and they all go inside.
Sabrina's doll warns Ash that they'll all have to play with her if he loses, and sends out Kadabra. Ash sends out Haunter, but he has disappeared. Ash looks around, but can't find Haunter anywhere. Brock wonders if Haunter ran away, and Misty notes that the Ghost didn't seem to be exactly trustworthy. Sabrina orders Ash to send out a Pokémon, but none are willing to battle. Ash says he quits, and runs out of the arena, with everyone else running after him. The exit closes, however, and the doll approaches from behind. The doll changes Brock and Misty into dolls, and Ash is about to meet the same fate, when the man from before appears. He teleports Ash and his Pokémon away. Sabrina walks up to the two dolls and mumbles, "He's back."
Back outside, Ash's Pokémon play, while he and the man talk. The man tells Ash that Sabrina wasn't always the way she is now, and he tells a story of how Sabrina as a little girl never played with anyone and spent all her time developing her Psychic powers. He then pulls out a picture, and tells Ash that Sabrina split into two personalities. One was the hardened trainer Ash saw, and the other was a girl who wanted friends, symbolized by the doll. Ash remembers that Sabrina had the same picture the man gave to him in her room, and struggles to make sense out of it all. The man looks worried, and wonders if he has figured out that her is Sabrina's father. Unfortunately, Ash, being the rather thick person that he is, concludes that the man is a photographer.
"Don't you get it?!" the man yells, but Ash doesn't. He tells the man about how Misty and Brock were turned into dolls, but the man hangs his head in sorrow, saying that there is nothing he can do, since the only way he can change them back is for Ash to defeat Sabrina. He asks Ash if he caught a Ghost Pokémon, but he says that Haunter disappeared. The man tells Ash that he must find Haunter before he can fight Sabrina again, and Ash sets off. He looks all over the city, but can't find Haunter. All the while, however, he is being watched by Team Rocket in a window washer cart. Meowth asks them what they're going to use to try to capture Pikachu, and James pulls out a fishing net. Meowth yells at them, saying that that's too plain. Suddenly, Haunter appears, frightening them so that they fall out of the cart. Jessie holds on for dear life, with James and Meowth clinging to her. Haunter floats down to her, and starts to make faces at her. Jessie tries hard not to laugh, but eventually cracks, letting go. Team Rocket falls down several stories, and hits the sidewalk, creating a huge crater. Ash sees Haunter, and thanks him for foiling Team Rocket's plan to capture Pikachu. After a little convincing, Ash and Haunter head back to the gym.
Back at the gym, Misty and Brock are in one of Sabrina's dollhouses. Even though they're dolls, they can still talk, and ask each other if they'll be dolls forever. Much to their surprise, another doll, sitting nearby, answers them. She introduces herself as Sabrina's mother, and asks them not to think badly of her daughter, as she really is a good kid. The roof is pulled off, and there stands Sabrina and her doll. Brock and Misty plead with her to change them back, but the doll tells them that if she does, they'll just run away again. At this time, Ash comes into the arena again. Sabrina asks him if he hasn't figured out that he'll never win, and sends out Kadabra. Ash sends out Haunter, but he has disappeared again. Ash rushes around looking, but Pikachu decides to go out again. Ash tells him that he wont be able to beat Kadabra, but Pikachu tells him that he doesn't want him to become a doll. Ash has Pikachu use Thundershock, but Kadabra keeps teleporting out of the way. Kadabra then uses Psybeam, which knocks Pikachu over. Pikachu then uses Thunderbolt, and actually connects. Unfortunately, Kadabra's health is fully restored using his Recover attack. Sabrina repeats the fact that Ash cannot win, and Haunter finally reappears in front of her. Her doll says that its not fair to have two against one, but the man appears in the room, telling her that Haunter is playing, not battling. Haunter makes several faces at Sabrina, then pulls out a bomb, which explodes. Suddenly, Sabrina smiles and starts to laugh. The man starts to cry, saying that he's never seen Sabrina laugh. Ash asks him if he took her baby pictures. Geez, Ash, how dense can you be?
The man tells Ash that Haunter has helped Sabrina come back to herself. Ash tells him that Haunter was supposed to beat Kadabra, but the man points to the Psychic Pokémon, who is rolling around on the floor laughing. Since he can't fight, Ash is the winner. Sabrina's doll disappears, and Misty and Brock are changed back to real people. Later, Ash says farewell to the changed Sabrina, and leaves holding the Marsh Badge. Ash wonders aloud if he really deserved the badge, but Misty and Brock reassure them. They pass by the hole Team Rocket is in which is being filled with cement. Ash dashes towards the path to Celadon City and his next challenge.