Ash and Gary prepare to have their battle as Ash's friends and Professor Oak watch from the sidelines. Gary suggests that they have a one-on-one battle to the finish, and Ash agrees, deciding to use Pikachu. Gary promptly sends out his Pokémon, an Eevee. Brock takes the role of referee and starts off the battle. Ash commands Pikachu to use Quick Attack, and Gary tells Eevee to use Reflect. A barrier forms around Eevee, and Pikachu rams into it, dissipating it and sending Eevee into the air. Eevee lands without any discernible damage done, leaving Misty and Tracey amazed, with Misty noting that it must be at a really high level.
Ash commands Pikachu to use Thunderbolt, but Gary tells his Eevee to use Double Team. Eevee performs the move, and Pikachu attempts to use Thunderbolt on all of them. As the illusionary copies vanish, Ash tells Pikachu to stop. Gary commands Eevee to use Take Down, while Ash commands Pikachu to use Agility; Pikachu's attack stops Eevee in its tracks. As Pikachu attempts to use Thunder, and Gary has Eevee use Skull Bash. Eevee collides into its opponent, stunning Pikachu. Pikachu falls to the ground, weakened, while Eevee lands perfectly with no damage. Pikachu attempts to get up, but is unsuccessful and knocked out. Brock declares that the match is over, and Eevee is the winner. After both Trainers congratulate their Pokémon, Oak commends Gary on his training, after which Gary tells Ash that he did a great job before departing. Ash tells Gary that he will beat him next time.
Later, as Ash relaxes on a rock with Pikachu and mulls over his defeat, Misty approaches, asking him if he wants to know where Gary is. Though Ash does not want to know, Misty remarks that he is out on a new journey already. Shocked by this, Ash asks Misty where Gary would be journeying to. Meanwhile, at Professor Oak's Laboratory, Oak is still gathering information about the GS Ball, with Tracey and Brock standing near him, but he finds that his scanners are not yielding any information on it. Ash makes his way up the stairs to ask Oak about Misty's earlier comment. Oak confirms that Gary is on his next adventure, adding that it is the reason that he has been training so hard lately. Misty then walks up the stairs, and asks if Oak has been able to figure out anything about the GS Ball yet; Tracey replies in the negative.
When Ash asks where Gary went, Oak replies that Gary is entering the Johto League. Ash, quizzical, asks what the Johto League is; Oak responds that it a very challenging League, and that Trainers have to compete and win battles and Badges, at a number of Gyms in the western territories to qualify in the championship. Oak goes on to say that Gary is planning to battle as many other Trainers as he can, in the hopes that with all of the experience he gets, he will become an even stronger Trainer.
Now outside of the lab, Ash proclaims that if he is going to become a Pokémon Master, he has to battle with the best. As a result, he decides to try the Johto League as well, with Pikachu agreeing. Misty affirms this, adding Ash has been getting a little lazy since beating the Orange League. Ash angrily defends himself, but Misty replies that this may have been the reason he lost his battle with Gary. The two then have an argument over it, prompting Brock to decide to rejoin the group, explaining that with him around, Ash and Misty will train, eat, and fight right, just like they used to.
Just then, Oak hands the GS Ball back to Ash, saying that he needs Ash to help him find out more about it, and tells him about Kurt, a man living in Azalea Town, who is famous for designing special types of Poké Balls, and who would know about what is inside the GS Ball. Oak then instructs Ash to take the GS Ball and head to New Bark Town, where all Trainers must sign up to compete for the Johto League. Ash agrees, saying that they will go there first, then take the GS Ball to Kurt in Azalea Town. Later, Ash and his friends arrive back at his house to find Mimey helping Delia with packing some things into his backpack. She mentions that she was on the phone with Oak and heard that Ash was leaving, so she decided to cook a big dinner for him and his friends.
Elsewhere, Team Rocket is dejectedly walking down the road, still mulling over their earlier defeat. Suddenly, Meowth notices Gary down the road, headed right their way, and the three decide to ambush him. However, Gary doesn't even notice Team Rocket as they perform their motto, and walks right passed them. Discouraged again, Jessie and James trudge onward, leaving Meowth behind, much to his annoyance.
Back at the Ketchum house, Oak presents Ash with a new Pokédex, explaining that the new model is loaded with anything Ash will need to know about the abilities, temperaments, and habitats of the new Pokémon he will encounter in Johto. At that moment, Tracey announces that Oak is going to let him be his assistant at the lab, explaining that Ash taught him to always go for what he really wanted.
Suddenly, two reporters, revealed to be Jessie and James in disguise, appear at the entrance of the room. After taking a number of awkward closeups, Jessie turns her attention to Pikachu and instructs James to move in for a closer shot. He then presses a button on the camera, causing a glove to come out of it and grab Pikachu. The two then escape, with Ash and Mimey in pursuit. Mimey projects several Light Screens at Team Rocket, stopping them temporarily, but they soon rejoin Meowth. James then presents the camera, with Pikachu trapped inside, to Meowth. Ash tells Pikachu to use Thunder Shock, but the attack is unsuccessful, to which James explains that it is rubber-reinforced. Tracey then sends out Scyther and has it slash at the camera case. Pikachu is released, allowing Ash to command Pikachu to use Thunderbolt. After Team Rocket is electrocuted, Tracey brings out Marill, and has it use Water Gun to send the trio blasting off.
Later on, Ash, now in bed with Pikachu curled up with him, converses with Pikachu about Johto, commenting that he is going to miss Tracey when they head out west, although he is glad Brock is with them. Ash then proclaims that they can win the Johto League, which Pikachu agrees with. The next morning, the group says their goodbyes and resumes their travels.