Ash, Misty, and Brock continue make their way to Violet City so Ash can earn his first Johto League Badge, but along the way the trio take a rest in Cherrygrove City. After polishing his Poké Balls and the mysterious GS Ball, Ash leaves them by the river as he runs to eat, but then, a Quagsire appears from the water. Misty attempts to catch it, but Psyduck comes out instead and appears to have a mental connection with the Quagsire, much like he had in The Evolution Solution with Professor Westwood V's Slowpoke.
As Misty tries to get Psyduck's attention, Quagsire steals the GS Ball and swims away. Ash tries to run after it, but ends up sending out Squirtle to chase it down. After failing to wrestle it out of the Quagsire's mouth, Squirtle uses Water Gun, it slips out of Quagsire's mouth, and Pikachu is able to catch it on the shore. While both Quagsire and Squirtle are using Water Gun against each other, Misty tries once again to catch it, but before throwing the Poké Ball, Officer Jenny stops them and arrests them for violating the Quagsire Preservation Restrictions.
Back at the station, Officer Jenny calls Professor Oak, who explains that he forgot to mention the restrictions to the group. Officer Jenny drops the charges and explains that the Quagsire are very special to the people of Cherrygrove City because they help identify the cleanest water in the area, and the reason that the Quagsire took Ash's GS Ball was because it was round, and during this time of year, the Quagsire take round objects, swim upstream with them, and then send the round things down the river again; these objects are said to be good luck, especially the last thing to float down the river.
Ash then sees another Quagsire outside of the station, staring at his GS Ball. After being rejected the opportunity to take the Ball up the river, the Quagsire follows Ash to a bridge, where it tackles Ash. In an attempt to get the Quagsire off him, Ash sends out Chikorita, who successfully knocks away the Quagsire by spinning the leaf on her head. It is then discovered that Chikorita has a crush on Ash. Quagsire comes up from behind Ash, and Chikorita knocks it off again. In the process, however, the GS Ball falls out of Ash's backpack. Quagsire catches it and begins to swim upstream with the Ball.
In another area, Team Rocket has lost track of Ash and his friends, so James is trying to map out where they might be. Jessie notices that Meowth is playing with a lawn ornament, and Meowth tells her that there's a whole bunch of stuff in a field nearby. The three are startled by a Quagsire who comes and takes the lawn ornament from Meowth. Jessie, annoyed that they would take away Meowth's toy, tries to send out Arbok and Lickitung, but two more Quagsire take her Poké Balls before she can send them out. The same happens with James's Weezing and Victreebel.
While both Ash's party and Team Rocket chase after their stolen Poké Balls, Ash's Party notices the group of Quagsire with Team Rocket's Poké Balls and follows them in hopes of finding the GS Ball. Unaware that they are following Ash's party, Team Rocket chase the same group of Quagsire from a longer distance away.
The Quagsire stop migrating at a place called Blue Moon Falls, but there are no waterfalls here. Ash spots the Quagsire with the GS Ball and decides to keep an eye on it so it doesn't lose the Ball. On the other side of the pond, Team Rocket spy on them and devise a plan to catch Pikachu and the Quagsire, but Ash's party is noticing something else:
The Quagsire are all staring into the sky, as if they're waiting for something to happen, but just as they begin to wonder what they might be doing, Team Rocket snatches up a Quagsire with a claw installed on their hot air balloon, but the Quagsire easily slip from the metal claws, so they cast a net over the school of Quagsire, but just as they begin to fly away, Jessie remembers that they still don't have their Pokémon. Before they get their Poké Balls, Team Rocket catches Pikachu with the claw, but before they can get away, some of the uncaptured Quagsire begin to hurl rocks at Team Rocket's balloon, which causes the claw to drop Pikachu.
With Pikachu back, Ash sends out Bulbasaur to use Razor Leaf on the net. After the Quagsire are released, a large rock is thrown at the balloon, sending Team Rocket blasting off again. After Team Rocket left, the Quagsire continue staring at the sky like before, and something triggers them to start swimming upstream again, and naturally, Ash and his friends follow. They find the Quagsire at the Blue Moon Falls, where they see that tonight, the moon is actually blue. Then, the Quagsire throw their round things into the air and use water gun on them to send them flying over the waterfall, and then flow back down. Brock suggest that they do this as a competition to see who can get it closest to the moon. A Quagsire with Ash's GS Ball shoots it the highest than the rest of them. Then the GS Ball comes down and begins to flow downstream, where Ash instinctively rushes after it.
Back in town, the rest of the townsfolk gather their belongings as they float down the river. And, luckiest of all, Ash's GS Ball floats down the river as the last item, which Officer Jenny scoops up and hands to Ash as he catches his breath. This renews Ash's belief that he can come out on top in the Johto League.