A village of kind, elderly people prepares a great meal for Ash and friends, and in return requests that the Pokémon Trainers assist them in defending their village against a gang of marauders that invades the village every year and attempts to rustle their sizable herd of Diglett. In explaining this to the children, the village's elderly mayor loses his train of thought numerous times, leaving Ash and friends completely confused by his request, until an unlikely source offers some clarification. The leader of the gang in question appears, succinctly restates the mayor's explanation, promises to return the following day with his gang, and finally excuses himself politely. A bit puzzled by this genteel marauder, Ash and friends nonetheless accept the mayor's request and along with Team Rocket, whose insatiable appetites had brought them to the dinner as well, begin fortifying the town against attack. When our heroes venture into the enemy camp, however, they learn that there is more to the marauders' plot than meets the eye.
With the Whirl Cup over, Ash and his friends head towards Transit Town. However, everyone's hungry and the next town won't be reached for quite some time. Meanwhile, Jessie is spying on them from a high area, while James and Meowth are busy digging a new pitfall trap. As the kids approach, Team Rocket hides behind a bush, waiting for their trap to work. Sure enough, the group falls down into the sinkhole. Team Rocket starts to bask in their success, but when they go to check out the hole, they fall into another one. Jessie complains though Meowth reveals that it is one of their traps, citing his Meowth mark is present on it. Suddenly, a bunch of Diglett appear in both Team Rocket's hole and the kids.
The Diglett form a "ladder," and a girl appears. Brock jumps out and does his usual spiel, and he is even more excited to meet Rita and her sister Sue. After getting both groups out of the holes, Rita and Sue explain that they need help in defending their village. They offer free food and shelter if the groups agree to help. Eager at the prospect of food, both accept the offer and travel with the sisters to their hometown, Diglett Village. Team Rocket and the group are welcomed to town by a large banquet. Ash and his friends begin eating immediately, but Team Rocket holds off. James and Meowth question if eating with the enemy is right, but Jessie ignores them and dives right into the food. Sue and Rita leave for their home but say the village elders, who are also the Town Council members, will explain the story to them. The men attempt to ask the group for a favor, but they get lost in their thoughts and only confuse Team Rocket and the group. Jessie becomes irritated, but she then reminds the Diglett villagers that they need help. Suddenly, the elders are interrupted by an armored man on a Dodrio. He claims to be the leader of the band of Diglett thieves. They explain that every year, they come to Diglett Village to steal all of the villagers' Diglett for their impeccable earth-moving abilities. He tells the elders that they'll be back tomorrow to begin stealing the Pokémon before riding away.
Everyone is curious about the oddly considerate thieves. The Mayor and one of the councilmen reveal that the Diglett Village has struggled because its young people have left for the city, while the elderly wish to remain in their homes and tend to the land. Realizing they need to act fast, Team Rocket and the others decide to join forces to stop the band of Diglett thieves. They come up with a plan on how to deal with the gang: Ash and the others will sneak into the enemy's village and spy on them so they can hear about the plans. Team Rocket will remain in Diglett Village to train the elderly residents on how to defend themselves. James puts "Operation No No Dodrio" into action.
Making their way into the village, Ash and the others hide behind a wall after seeing the leader. Pikachu glances at the leader and jumps back in surprise. The others look and are stunned to see Sue talking to the leader of the band of Diglett thieves. Ash and his friends run off but are spotted by Rita, who alerts the Diglett thieves' leader to their presence. The leader removes his mask and he is revealed to be the Mayor of Diglett Village, leaving the group confused. They sit down while the Mayor explains that the young residents of his town are also the children and grandchildren of the elderly folk of Diglett Village. The Mayor details that Diglett Village was established in the dry desert, but the residents and Diglett managed to transform it into productive agricultural land. He and the children simply wish for their parents to rest at the specially-built retirement home, but the elderly residents refuse to leave their homes. The band of Diglett thieves was then formed in order to keep the elderly residents in shape, and every year they return to the village in order to check up on their parents. The Mayor reveals that the Diglett thieves are simply a ploy, and he showcases some of their protective mechanisms to avoid harm to either themselves or the elderly. With the reassurances, Ash and his friends then agree and promise to help out the Diglett Village residents.
The next day, James sits on top of a makeshift tower in a tree, waiting for the band of Diglett thieves. When he sees them, he alerts the elderly residents and calls for them to charge forward. The pitfalls Team Rocket was digging earlier work, as many Diglett thieves are falling into them. Ash and his friends help make the squabble more authentic by sending out their Pokémon to battle the invading thieves. The Diglett soon carry the Diglett thieves away and the elderly cheer them on. Suddenly, the leader hoists a white flag into the air and announces that he and his thieves will retreat. But Team Rocket, who is unaware of the scheme, is set on defending the elderly folk of Diglett Village. The trio begins throwing bombs at the ground, but the band of Diglett thieves have their defensive shields to keep them safe. Ash, however, is concerned and has Pikachu use Thunderbolt on them, sending them blasting off.
The elderly are immensely grateful to Ash and his friends for their assistance. The council gives the group a Silver Wing Badge for their efforts. A councilman explains that it was made on Silver Rock Isle, and he informs the group that a ferry from Transit Town will help them reach the island. Ash is keen to go and admits that Silver Rock Isle may reveal more about the mysterious Pokémon they encountered earlier. Later, the group boards a boat and it speeds towards their next destination, Silver Rock Isle.