There's a new breeding center in town that promises to pamper and polish your Pokémon, and maybe even evolve them. But our heroes soon discover its terrible secret—it's no more than a cover for a wicked Pokémon-stealing operation. And the thieves, for once, aren't Jessie and James—they're Butch and Cassidy, a pair of Team Rocket members who are actually in good standing with the boss. They're a couple of fashionistas, like Jessie and James, only they're better at it, and better at crime. Needless to say, there's no love lost between the two Team Rocket groups. Butch and Cassidy frame our heroes for the attempted theft of the Pokémon at the breeding center. The kids are carted off to jail, and it looks like Butch and Cassidy will get away with their Poké-purloining plans. But some photos that Snap took at the breeding center put our heroes in the clear, and Butch and Cassidy behind bars. As our friends leave town for their next adventure, Snap parts ways with them to continue his Pokémon photography.
Ash, Misty, Brock and Todd are taking a break in the middle of a city when they see a commercial for a Pokémon breeding center. Thinking it might be an interesting place to visit, they head off to locate it. Misty decides to drop off her Psyduck at the breeding center in order to get its eyes fixed. Ash believes that Misty is planning on leaving the Pokémon at the center, but she tells him that no matter how annoying it is, she'll keep it.
After leaving the breeding center, Todd notices a sign in a restaurant, advertising an all-you-can-eat meal for free. He believes that there is a catch, but the group heads in regardless. The owner tells the kids that he will give them a free meal if they can guess and show him his favorite Pokémon. Everyone releases all of their Pokémon (excluding Ash's Charizard), but the owner tells them none are his favorite. He then pulls out a picture of a Psyduck. Shocked, Misty asks him if the restaurant will still be open later in the evening. The owner informs her that he will be, and the group heads back to the breeding center, only to find it closed. Todd tells her they could wait until tomorrow, but Misty angrily tells him she wants to get Psyduck then and there. Snooping around the back, they find a secret entrance and walks in.
Misty and the others are shocked to discover all the Pokémon in cages. They also find a conveyor belt leading into another room. Unknown to them, Butch and Cassidy are in the other room deciding on which Pokémon to give to Giovanni. Todd takes pictures of the fake breeding center and the cages as evidence, but Butch and Cassidy see the flash, however, Ash and the others hide, and when Butch comes to investigate, Pikachu uses an electric attack from inside one of the cages, making Butch think that the flash they saw was from Pikachu's electric attack.
Then, Jessie, James, and Meowth arrive to steal the Pokémon (as Giovanni has not informed them that the breeding center was run by Butch and Cassidy, as they might screw it up), and run into Ash and the gang, and mistakenly believe that they are also trying to steal the Pokémon. However, Butch and Cassidy catch them, and Jessie recognizes Cassidy, though James doesn't. Butch and Cassidy do a Team Rocket motto. Raticate appears at the end of their motto. While they chase them around, James goes to pick up his Weepinbell that he left, only to discover that it has evolved into Victreebel, and is constantly trying to eat his head. Butch and Cassidy trap Ash, Brock, Todd, Jessie, James, Meowth, and Victreebel in cages, leaving only Misty, Pikachu, and Togepi, who escape.
Butch and Cassidy take Todd's camera and frame him, Ash, Brock, Jessie, James, Meowth, and Victreebel as burglars, and Officer Jenny arrests the seven of them. Misty goes back into the breeding center in disguise to get the camera, and Pikachu sneaks around and picks up the camera. Right when Ash and the others are put in jail, Misty shows Officer Jenny the pictures, and Ash, Brock, and Todd are cleared, and subsequently released. Together they move against Butch and Cassidy, and Pikachu fries Raticate with a Thunderbolt. Ash's Bulbasaur defeats Butch and Cassidy with its Vine Whip, and both are tied up and hauled off to jail.
Ash and the others go to the buffet, and since they have Psyduck with them they get to eat their free meal. Meanwhile, Team Rocket digs a tunnel out of jail. Ash and his friends reach a fork in the road. Ash, Misty, and Brock go on to Cinnabar Island while Todd goes the other way, to the mountains so he can take some more pictures. As Ash, Misty, and Brock walk along the road, Jessie, James, and Meowth are digging underneath them.