Our friends have stopped at a Pokémon Center. Ash calls Professor Oak, he's going to send his Tauros back. Professor Oak says that's okay, but he wants to keep Heracross a while longer. Ash tells Heracross to do whatever the Professor tells it.
Nurse Joy complements Ash on taking such good care of his Pokémon. Brock flirts with her, but she says she has to examine more Pokémon for the upcoming Fire and Rescue Grand Prix and she goes, leaving Ash wondering what the Grand Prix is. Later they stop by an arena and they see a poster advertising the Grand Prix. It's a firefighting competition for water Pokémon. Ash wants to sign up but Misty points out he only has one water Pokémon: Squirtle. Ash isn't worried, he'll just borrow Misty's Staryu and Psyduck, which she isn't too thrilled with.
They go to sign up and meet an old friend, Captain Aiden and Team Wartortle. Brock comments that the Wartortle look well-trained, and Misty tells him about the time they met Team Wartortle in the Orange Islands. It turns out they're the returning champions. Next they go to a training area, where there are teams of Polywhirls, Quagsires, Marills, Vaporeons and Golducks practicing. Misty is surprised that Ash was allowed to join at such short notice but Captain Aiden had told the officials that Ash's Pokémon had proven themselves to be good firefighters. Brock says it'll take more than luck to win this competition, but Ash and his team are confident. Squirtle looks around and sees Officer Jenny and the Squirtle Squad! The team isn't looking happy. Jenny gives them a pep talk but they're still nervous. Squirtle runs over and greets them, and the others say hello to Jenny. Although the Squirtle Squad is obviously intimidated by Team Wartortle, they shake hands, and everyone is looking forward to the match.
Team Rocket is watching with binoculars. They'll capture all the water Pokémon and give some to the boss, keep some, and sell the rest for the money. The Squirtles chat for a bit, it's good to see old friends. Jenny asks Aiden if they can share the practise time and Aiden says okay. Each team lines up in front of a series of targets. Team Wartortle works together and blasts each target square on with their Water Guns, but the Squirtle Squad can't even hit the targets. Ash's Squirtle gets frustrated by this, stomps on all their tails to get their attention and takes charge. With their former leader giving the orders, the Squad improves dramatically and shoots down the targets. Captain Aiden is impressed that the Squad pulled together so well and Brock says that no matter how long they've been apart, the leader is still the leader.
The competition begins in the arena. Two small wooden houses are set on fire, and two teams compete to put the fire out first. It's Team Ketchum (Squirtle, Staryu, Psyduck, Pikachu) against a team of four Muks. Ash's team does well until Psyduck gets in Staryu's way and is thrown into the burning house. Squirtle rescues Psyduck but the delay costs them time and the Muks smother their fire to win. Ash is disappointed. Next the Squirtle Squad go up against a Golduck team. Captain Aiden is concerned that the pressure of the competition will break the Squad's concentration.
The houses are lighted. The Golduck team gets off to a strong start, but the Squirtle Squad just stand there, unable to do anything. Jenny encourages them and they run forward, but trip over each other. Finally they get their act together but the Golduck team is way ahead. Squirtle and Ash run out onto the field, Jenny tells them the Squad isn't listening to her. Pikachu Thunderbolts them to get their attention, and Ash tells Squirtle that the team needs their leader. With Squirtle in charge, the Squad rallies and catches up to the Golducks, eventually beating them. Jenny tells Ash that his Squirtle is a natural-born leader.
Suddenly the house erupts in flames again, and Team Rocket appears in a giant robot with flamethrowers in its arms. They spout fire at Ash, Jenny and the Squirtles. Captain Aiden orders Team Wartortle to use their Water Gun attacks against the robot, but TR turns up the power and the team is hard-pressed to stop it.
Other teams arrive on the field to help. The robot captures all the Pokémon with nets (including Pikachu) and pulls them inside. Ash wants to help Pikachu but Jenny pulls him back as TR begins to shoot fire all over the place.
Ash tells his Squirtle that he has to lead the Squirtle Squad to beat Team Rocket, and Squirtle agrees. The Squad makes a plan, and they all put on their sunglasses before attacking the robot. The robot tries to stomp on them but they jump out of the way. Eventually they get the robot to lose its balance and fall over. Squirtle uses a Skull Bash attack to get inside the cockpit and short circuit the controls. All the captured Pokémon escape and Squirtle jumps out safely. Despite the damage to their robot, TR tries to attack again. Squirtle and Pikachu attack together, causing the robot to explode and send TR blasting off.
As the field is being repaired, Ash congratulates Squirtle and says that the Squirtle Squad needs a good leader - him. Squirtle agrees. The competition resumes. The Squirtle Squad and Team Wartortle both do very well. The last event has the Squad against Team Wartortle in a timed match where they have to rescue a Clefairy from a burning house. After a very close race, the Squirtle Squad wins it by just one second! The Squad celebrates and Captain Aiden congratulates them on a job well done.
Soon it's time to say goodbye. Ash tells Squirtle to be careful while fighting fires. Squirtle wants to shake hands with Bulbasaur; it hesitates before using its vines to shake with. Jenny drives away on her motorbike with the Squirtle Squad. Ash calls out that they'll always be friends no matter what, and remembers some of the adventures they shared together.