Excited about winning his Boulder Badge, Ash can't wait to get to Cerulean City to battle for his Cascade Badge. For some reason, though, Misty was trying to avoid entering Cerulean and tries to convince them to go to Vermilion City but fails, she then leaves Ash and Brock as they enter the city.
When Ash and Brock enter the city they see a big crowd of people in a circle surrounding a building when they get to the front they see Officer Jenny and she accuses Ash and Brock of being the criminals. When they prove their innocence, she lets them go then sends the rest of the crowd away. After that, they sat on a bench and Ash ask Brock for inside information on the Gym Leader. Brock says he is a Gym Leader, too, and he cannot give out that information. Then Brock says to him "I have to take care of some business in town". They split up and Ash heads to the Cerulean Gym and Brock does his own thing.
When Ash gets to the gym, he finds three sisters performing underwater. Ash confronts the girls backstage, finds out that they are the Gym Leaders and challenges them to a battle. The girls (Lily, Daisy and Violet) explain that their Pokémon are too tired to battle, and offer Ash the badge without a battle. Ash is about to take it, when Misty appears and challenges him.
It turns out that Misty is the youngest of Sensational Sisters, but they call her "the runt". After Misty argues with her sisters, she challenges Ash to an official Cerulean Gym battle with rules of 2 on 2. Ash tries to send out Pikachu but he refuses to go into battle because he does not want to hurt Misty or her Pokémon. So instead Ash sends out Butterfree to battle Misty's Staryu after a quick battle, Butterfree gets knocked into the water causing it to lose the battle. After that Misty sends out Starmie and Ash sends out Pidgeotto. Just as Ash is about to win the battle Team Rocket interrupts and tries to steal all the Water Pokémon and the water from the Gym.
While Team Rocket is stealing all the Water Pokémon by using a vacuum machine, Pikachu gets sucked in as well. He releases a Thunderbolt causing the machine to explode, sending Team Rocket flying. After Team Rocket is gone, Daisy gives Ash the Cascade Badge. Misty tries to argue but her sisters but they convince her that if Ash used Pikachu from the start, he would have beaten all her water Pokémon. Misty agrees with her sisters and claims that when she comes back from her journey with Ash she will be a great Trainer. Brock then meets Ash outside of the gym and together they head for Vermilion City