While aboard Lapras, Ash and his friends follow a news crew to Fukuhara Island No. 4, where an excavation is underway after the discovery of a fossilized Kabuto. While on the island, they are shocked to learn that Nurse Joy is the director of the excavation. She tells the new reporter that the excavation hopes to study the habitat of the extinct Kabuto. She also remarks that they would like to find out the veracity about the claims about Kabuto oil, considered a youth elixir and health medicine. After hearing all of this, Ash and Tracey ask if they can help. Meanwhile, Team Rocket watches the whole scene from their Magikarp submarine. As Jessie wonders why a television crew would be on the island, Meowth says that they could be on TV as well if they hurry and capture Pikachu.
Nurse Joy leads a group of explorers, the news crew, and Ash's group to the digging site. A group of Growlithe also accompany the team, while Machoke are seen carrying some equipment and several Rhydon for drilling holes. As they pass by, a mysterious silhouette of a man is seen behind a tree. As they reach a small cliff path, Team Rocket is shown following the same path on a lower section of the cliff. As Nurse Joy's team moves on, the Growlithe start to growl at a large boulder on a hill, but Nurse Joy dismisses the alarm. Suddenly, the boulder falls and starts racing towards them. While the group runs down the hill, Ash suggests that Nurse Joy use the Machoke's strength. They Pokémon succeed and the team is saved. Unfortunately for Team Rocket, the boulder then rolls off the side of the cliff and knocks James into a canyon.
As the team continues to walk, the same silhouette is seen behind a rock. Pikachu catches a glimpse and looks over, which catches Ash's attention. Ash turns around to check, though he sees nothing suspicious. Eventually, the team reaches their destination, a hidden bay on the island's desolate northern shore. The crew and their Pokémon start to excavate. As Ash, Tracey, Pikachu, and Togepi dig, several boulders start falling onto them. Nurse Joy commands Rhydon to use Horn Drill, which shatters the boulders.
Afterwards, Misty mentions that she thinks that someone is responsible for all of the incidents. Tracey refutes her claims and clarifies that the island is supposed to be deserted. Just then, the silhouette is seen running from behind a tree; Pikachu notices and starts chasing after him. Ash follows suit and ends up jumping on the man, bringing them both to the ground. As the rest of the crew catches up, the identity of the man is revealed to be Umberto. He sternly tells them to leave the island, and admits that he has been pushing the boulders onto them, clarifying that he was only trying to keep them out of harm's way.
Umberto then tells them of an ancient prophecy, which implies that anyone who comes to the island to disturb the Kabuto will cause the island to be swallowed up by the sea. At that moment, an explorer comes running into the forest, ecstatic from finding another Kabuto fossil. He leads the others into a cave, where they find walls of Kabuto fossils at the other end. Just then, Team Rocket arrives, causing the cavern walls to crumble. James then throws a bomb that gets passed around until Ash catches it and throws it at the wall of Kabuto fossils. The fossils then explode off the wall, allowing Team Rocket to wrap them up in a net. As the trio tries to get away in their hot-air balloon, the Kabuto suddenly come to life as moonlight hits them. One ends up popping Team Rocket's balloon, which leads to them blasting off.
It is soon apparent that the Kabuto were Fukuhara Island No. 4's foundations, and the island begins to flood as the fossil Pokémon become more disturbed. As the island starts to collapse, the team decides to head for the boat, but Umberto insists that the prophecy advises trespassers to run into the forest and make a raft. They listen to him and start building a makeshift raft. As the island sinks, they all jump onto the raft, and Ash sends out Lapras and Squirtle, while Misty sends out Staryu and Goldeen to help pull the raft. They all make it out to sea and watch as the island completely sinks. Joy remarks that maybe the Kabuto oil does cause them to live forever. She then apologizes to Umberto for not believing him, and the news reporter says that she thinks it is best if no one finds out the Kabuto's secret. Later on, the Kabuto are seen swimming towards the moonlight, looking for a new home.