While riding Lapras across the ocean, a hungry Tracey says they are getting close to Mikan Island, which is also home to one of the four Gym Leaders in the Orange Crew. Meanwhile, Team Rocket, now in a Magikarp submarine, is tracking them, but their submarine's propellers gets tangled in seaweed and they begin to sink.
Upon reaching the shoreline, the group heads straight for the Pokémon Center. There, Ash talks to Professor Oak via videophone and lets him know he recently caught a Lapras. Tracey officially introduces himself to Oak, though the call is cut short as Ash's Muk smothers the Professor. Ash and his friends walk along the dirt path and see Mikan Gym up ahead. Ash starts to run towards the Gym, though he stops after seeing a coconut on the ground. He runs over to it with Pikachu and picks it up, but a bucket of water falls on their heads, revealing it to be a trap set by a boy named Senta. He chastises Ash and criticizes his Top 16 position in the Indigo Pokémon League. He challenges Ash to a battle, but Cissy, his older sister and the Mikan Gym Leader, intervenes and scolds her younger brother.
Ash is prepared to have a match, but Cissy explains that on the Orange Islands, the Gym battles are different from Kanto's Pokémon battles. Senta presses the buttons on his remote, making a line of cans appear, and the battlefield becomes an aquatic pool. Cissy proceeds to call out her Seadra, which Ash scans with his Pokédex. She announces that the first challenge is a Water Gun match-up, where a Pokémon's accuracy is tested by shooting down as many cans as possible. Ash's Squirtle proves to be an even match against Seadra, and the aim of the challenge shifts to shooting down flying plates. Both are evenly matched and manage to hit the final target at the same time. Cissy declares the first challenge a draw, and Ash congratulates Squirtle's efforts while Seadra turns away in disgust.
Cissy escorts Ash and his friends to outside the Gym. To break the tie, Ash will go up against Cissy in a Pokémon Wave Ride, where the aim is to swim out to a flagged buoy and return to the beach first. Cissy calls on her Blastoise, while Ash sends out his Lapras. Before the race can begin, however, Team Rocket appears. When Ash asks that they disappear, James launches into a tear-filled confession about how he had to go out and untangle their submarine, nearly drowning in the process. Meowth calls for James to focus, and James follows suit by calling out Weezing. Amongst Weezing's Smog, Team Rocket nets Cissy's Blastoise and begins to dive back underwater, only to find that their submarine's propellers are still entangled in seaweed. In a bid to push through, Team Rocket snaps their pedals and their submarine sinks to the seafloor again. Just as Cissy had predicted, her Blastoise proves to be too powerful for Team Rocket's net, and it returns to the beach. Pikachu dips his tail in the water and uses Thunderbolt to shock Team Rocket, while Blastoise sends the trio blasting off with its Hydro Pump.
With Team Rocket defeated, the Pokémon Wave Ride begins. However, Ash and Cissy must stand on their Pokémon's back. During the race, they are evenly matched, so Ash has Lapras nudge the competition, but Blastoise responds, causing Ash to nearly lose his balance. The delay allows Cissy to get ahead of him, and she makes the turn around the flag first. As Ash catches up with Cissy, the pair notices a tidal wave suddenly appearing behind them. To Ash's surprise, Lapras freezes some of the wave with its Ice Beam. However, the wave still crashes into Cissy and sends her flying, but Blastoise catches her in time. Cissy once again gets ahead, but Ash comes up with an idea and has Lapras use an Ice Beam to make an ice-track. Lapras proves to be faster on the ice than in the water, allowing Ash to barely win the race.
Cissy commends Ash's clever Ice Beam tactic, and notes that she can see why he made it so far into the Indigo League. In commemoration of his victory, she gives Ash a Coral-Eye Badge. Afterwards, he and his friends ride away aboard Lapras.