Our heroes take a lunch break after passing through Onix Tunnel. Misty and Brock set up a table while Ash goes to get some water. However when he returns he notices that his backpack is missing! He thinks someone has stolen it, but the others tell him that they hadn't seen anyone. Brock sees Pokemon footprints in the dirt, and Ash vows that he'll find whatever took his backpack.
In town, Nurse Joy and Chansey leave their bag of groceries on a bench so they can buy some ice cream. Team Rocket peeks over a wall behind the bench and James uses a fishing rod to lift a packaged ham out of the bag. When Joy finishes her cone, she realizes that the ham is gone. Behind a nearby building, Jessie pulls the wrapper off the ham. A hungry Meowth tries to chomp it, then the three of them fight over the ham. During the fight the ham gets dropped, and a mysterious Pokemon picks it up and takes it away. Team Rocket runs and hides as Nurse Joy comes around the corner, having heard the commotion. She sees the empty wrapper on the ground and wonders who could have stolen her ham.
Just then, Ash and his friends arrive and ask her what happened. Before she can reply, Brock flirts with her and has to be dragged away by Misty. Joy tells them about her missing ham, and Ash says that the same thing happened to his backpack. Misty suspects that Team Rocket might be behind this, but Joy insists that she hadn't seen anyone.
Pikachu sees more footprints on the ground like the ones from before, and they lead into the woods. Team Rocket follows them, hoping to get the ham back. They follow the footprints until they end in the middle of nowhere, and Brock announces that they'll spend the night here because the way the wind is blowing makes it an ideal place. Ash doesn't understand but Brock assures him that he knows what he's doing.
Brock carves a stick to look like a sausage and "cooks" it over a fire along with a real sausage. Later, after dark, they leave the fake sausage on a tree stump and hide in the bushes. Brock says that the wind will carry the smell of the food, and hopefully the Pokemon will come to take it. It gets late and the fire goes out. Pikachu hears something but before they can all get out of their hiding place, the decoy has already been taken. Brock isn't worried; soon the Pokemon should realize that they have a fake and come back for the real meat.
The plan appears to work a little too well. Growls precede the appearance of a pack of four black dog-like Pokemon. These are Houndour, dark Pokemon. A fifth Houndour, obviously the leader of the pack, is sitting on a nearby ledge. Ash yells at it that he wants his backpack, but the Houndour all attack. Ash releases Cyndaquil and Chikorita, Misty calls Staryu (but gets Psyduck instead), and Brock get out Onix. They defend themselves admirably against the pack and gradually get the upper hand. Soon the leader leaps down and calls off the pack - it wants a one-on-one battle with Ash!
Ash accepts the Houndour's challenge and sends out Pikachu. The Houndour starts off with a Leer attack, but Pikachu's own Leer attack is enough to render it ineffective. Then Houndour tries a Flamethrower and misses, Pikachu is too fast to hit. Ash tells Pikachu to use Quick Attack, but the Houndour is fast also.
Houndour attacks again, Pikachu leaps out of harm's way and uses Thunder, which the Houndour manages to dodge. Now both of them are tired. Ash is trying to think of what to do next when suddenly all the Houndour use a Smog attack and run away. When the smoke clears, Ash and friends take off after them.
They come to a cave where an injured Houndour is being attacked by a Golem. The stolen items are here too, and Brock realizes that the Houndour were taking the stuff to help their friend. The Houndour all use Flamethrower on the Golem but fire attacks don't work on it. The Golem then attacks the pack leader, but Ash runs down, grabs the Houndour and carries it to safety. Chikorita's Razor Leaf attack sends the Golem running.
Brock kneels next to the injured Houndour to check it out. The wound isn't deep but it's infected. However when Brock gets out a spray bottle the other Houndour growl at him and he drops it. Ash picks up the spray and reassures the Houndour that they're trying to help. When he uses it, the hurt Houndour yelps and the rest become more suspicious. Ash tells everyone to chill out and recalls his Pokemon as a show of good faith.
Brock checks on the injured again, it's burning up with fever. Ash promises the pack that he'll get their friend to the Pokemon Center and asks them to trust him. He picks up the Houndour on his back and is about to leave when Team Rocket shows up and demands to have Pikachu, the Houndour and the ham. Misty realizes it was they who had stolen the ham from Nurse Joy.
The pack blocks TR's way, giving the kids the chance to escape with their hurt friend. TR lets out all their Pokemon (Victreebel chomps James before obeying orders) but the Houndour use their Leer to stop them in their tracks. TR orders the Pokemon to attack, but the powerful Flamethrower attacks of the Houndour are too much and they flee.
Our heroes run until they are tired. Ash is determined to keep going but even he finally collapses. The pack appears, and the leader takes the injured one on its back for the rest of the way. They all make it to the Pokemon Center, where Ash alerts Nurse Joy. She rushes the Houndour into the operating room. After a while Joy comes out and pronounces that the Houndour will be fine.
A noise from outside brings them all running. It's TR again, in their balloon. They shoot down a large net that Pikachu and the pack leader manage to avoid, but the rest of the Houndour are caught. Ash chases after the balloon but it's too high up for Pikachu to shock! He tells the Houndour to jump as high as it can with Pikachu on its back, and use Flamethrower to cut down the net. The plan works, and Pikachu leaps off the Houndour's back and finishes TR with a Thunderbolt. Ash cheers and the Houndour all jump on him and lick his face.
In the morning the injured Houndour has fully recovered, and to celebrate Brock gives it the sausage he cooked earlier. Ash and friends bid farewell to the Houndour pack and continue on toward Goldenrod City. Meanwhile, Team Rocket is dangling from a tree branch on the edge of a cliff, and Wobbuffet isn't doing much to help.