Ash, Misty, and Tracey are once again riding Lapras to the next island in the Orange Archipelago. Ash complains about how hungry he is and Tracey points out that Mandarin Island is just ahead. Ash and Misty both look, but all they see are a bunch of buildings that appear to be floating in the water.
On the island, two dark figures stand in a room filled with television screens. One has yellow hair sticking down, the other has a low, raspy voice. They see Ash and his friends making their way to the island and recognize them. "It's payback time," says the yellow-haired woman.
Ash and his friends reach the shore of Mandarin Island and see some Pokémon attacking some people. They appear to be the Pokémon's trainers. They move closer and Pikachu suddenly stops. It turns around and faces Ash with a cold, angry stare on its face. Togepi wiggles out of Misty's arms and joins Pikachu, the same expression on its face. Ash asks Pikachu what is wrong, only to be hit with a tremendous shock, knocking all three trainers to the ground. Pikachu and Togepi walk towards the Pokémon who had been attacking their trainers earlier and several Magnemite surround Ash when he tries to stop them. They all shock him at once, but Ash is persistent. The Voltorb jumps between them and uses Self-Destruct. When the dust settles, all the Pokémon are gone.
Officer Jenny roars up on her motorcycle and Ash tells her what happened. Jenny tells them that this has been happening a lot lately, and a Gastly appears in front of her. They go to the station to call Professor Oak. He says that some "outside force" is affecting them and Jenny suggests a Psychic attack. She tells him that Gastly is a Ghost Pokémon and hasn't been affected by whatever is changing the Pokémon. Since Ghost Type Pokémon are strong against Psychic, she feels that this is the case. Oak agrees with her and wishes them all luck.
Tracey tells everyone that a Pokémon alone wouldn't be making all the others turn on their trainers. Therefore, there must be humans behind it all. Ash tells Jenny that if they can find the Psychic Pokémon doing all of this, they'll find all the Pokémon.
Meanwhile, Team Rocket has arrived on Mandarin Island, or "The Big Orange" as they call it. Meowth scratches them for losing their focus and is about to fight Jessie when he seems to become affected by the Psychic powers. He runs away on all fours with Jessie and James soon behind.
After a few minutes of running, Meowth stops in front of a broadcast tower and enters through a hole in the wall. He tumbles through a pipe and ends up in the big room from the beginning of the show. Two figures emerge from the darkness and recognize him. Jessie and James fall through the pipe and recognize them too. It's Butch and Cassidy! They both say they're versions of their motto, line by line. Cassidy teases Jessie and she asks her and Butch how they got out of jail. They say that the boss came in personally and bailed them out. Meowth runs over to Cassidy, and Butch points over to the large number of other Pokémon they've "captured".
Jessie and James send out all their Pokémon to steal Butch and Cassidy's. Victreebel eats James head (like usual) and a Drowzee with several wires attached to his head floats down from the ceiling. He waves his hands around and all four of Jessie and James's Pokémon glare angrily at them. Butch explains that the machine Drowzee is hooked up to amplifies his Hypnotic powers which are sent through the satellite dish on the top of the tower. Butch and Cassidy then use Jessie and James's Pokémon to get rid of them.
Later, Jessie and James wake up in the Pokémon Center, being watched by Ash, Misty, Tracey, and Officer Jenny. Jessie asks why they're in the center, and Ash tells her that they found them unconscious in the road. Jenny wonders aloud if there is any connection to them and the reason the Pokémon have been missing, and Ash asks them where Meowth is. James tells them that he, along with all their other Pokémon, are gone. They proceed to leave, but Ash stops them, telling them that they just have to help them. They agree to help.
In a few minutes, Jessie and James approach the tower with a cart covered by a sheet. They tell Butch and Cassidy through a camera and speaker by the door that they've decided to join together. James pulls the sheet off of the cart and show that it is full of Pokéballs. They are allowed inside. They push the cart hard in the direction of Butch and Cassidy, and Ash and his friends along with Officer Jenny pop out. Jenny tells them that they are under arrest and that they should come with them. Butch and Cassidy move to show the many Pokémon are there. Ash uses his Pokédex on Drowzee and concludes that it was its Psychic abilities that allowed Butch and Cassidy to control the Pokémon.
Ash tells them to give their Pokémon back, and Drowzee prepares to make them attack. Officer Jenny uses Gastly but it doesn't work. All the Pokémon attack at once and Gastly deflects it so that Ash could get by.
Drowzee takes full control of Pikachu and shocks Ash. Ash teases him and Pikachu follows him, trying to shock him. Ash jumps onto the machine, and Pikachu gives a final shock, connecting. Unfortunately, the machine also blows up and Drowzee loses his effects. Misty runs up to Togepi, sweeping it in her arms and Team Rocket welcome back their Pokémon as well. Pikachu jumps into Ash's arms. Weezing fills the area with Smog and everybody runs outside. Gastly breaks the gate down and all the Pokémon run out.
Butch and Cassidy aren't done yet, however. They prepare to battle Jessie and James, but Ash joins in. He's angry about what they did and tells Pikachu to shock Drowzee. He teleports out of the way and directly in front of Pikachu. Arbok lunges for a Bind attach, but Drowzee teleports again. All other three of Team Rocket's Pokémon attack, but Drowzee sends them flying with a Mega Punch.
Butch tells Drowzee to bounce his Psychic attack off of the antenna to take control of the Pokémon again. Ash runs towards it as it starts a Metronome attack, waving its hands in the air. Unbeknownst to everyone, however, Togepi is using the same attack. Moments later, Togepi finishes and the tower blows up.
Butch and Cassidy are thrown into jail once again, and Ash is awarded with a special citizenship. Jenny asks where Team Rocket is, as they deserve an award too. Ash has no idea. Atop a building nearby, Team Rocket watch. James wishes they could accept, but they both agree that wrong is the way to go. As Ash and his friends ride off on Lapras once again, Tracey comments that the only time Team Rocket has been on the winning side was when they were with them. Ash and Misty concur, and they ride off