Ash and his friends are pleasantly surprised to see Sparky in front of them and his Trainer, Ritchie soon approaches them. Ash asks what Ritchie is doing here. Ritchie explains that after the Indigo Plateau Conference, he heard about a mysterious Pokémon in the Whirl Islands. His extensive research has lead him to Ogi Isle, and Ash recalls his own encounter with something near Blue Rock Isle. Ash boasts about his natural instinct, but Brock figures that there is a reason that both they and Ritchie are on Ogi Isle. Ritchie points out a nearby island, and soon he and the group row over to it.
Meanwhile, on the island, a local boy, Oliver plays with his Lanturn and good friend Silver, who remains only a shadow silhouette underwater. He soon spots the group’s rowboat and calls for Silver to hide in the meantime. Ritchie and the others make land and introduce themselves to Oliver. Ash declares that they are looking for a mysterious Pokémon. Oliver seems nervous, almost as if he was faking his uncertainty before swimming off to avoid more questions. Ritchie is suspicious, but with no answer, the gang goes off to comb the island. When the coast is clear, something pulls Oliver under the water, his friend Silver, a young Lugia.
Oliver thinks the coast is clear, but two Team Rocket Grunts stream the footage of Silver back to Dr. Namba, who is watching his operation closely from his underwater lab facility. Inside the base, Dr. Namba orders his agents to move forward and retrieve "mysterious Pokémon X", the code name for Silver. A submarine soon jets off from the base to complete the task. The two Rocket agents quickly net Silver. Oliver orders Lanturn to attack them, while he and Silver dive underwater to escape. As the three swim away, they are forced to change course when the Rocket submarine surfaces. The pursuit continues, and Oliver swims passed Ash and the others, with Silver instantly catching their attention. The Team Rocket trio also watch the scene unfold from their Magikarp submarine's periscope. James instantly recognizes Silver as a Lugia, remembering the one from the Orange Islands.
Oliver swims towards the shore and Ash's group. Suddenly Team Rocket duo, Butch and Cassidy emerge from their submarine. As Cassidy casts a net out to catch Silver, Ash calls out Bayleef, and she slashes the net with a Razor Leaf attack. Cassidy and Butch call out their Houndour and Hitmontop respectively. Bayleef is struck down by Houndour's Flamethrower and Hitmontop's Rolling Kick. Ritchie's Pupitar, nicknamed Cruise, uses Take Down on Hitmontop. Houndour breathes a Flamethrower, but it proves useless against Cruises's hard shell. Hitmontop approaches with a Triple Kick, but Bayleef tangles it in her Vine Whip. Bayleef sends Hitmontop spinning back at Houndour, so Cassidy and Butch quickly recall their Pokémon. Cassidy calls for a full steam ahead approach, but Luka arrives on the scene and crashes her vessel into the sub. Cruise whips up a Sandstorm, forcing Team Rocket to retreat. As the sub drives, the Team Rocket trio follow in their own submarine.
Luka is glad to see everyone is fine. Ash pats Silver and tells Ritchie that he has seen a Lugia before in the Orange Islands. Oliver admits that Silver cannot fly yet, making it vulnerable to being stolen and apologizes for lying earlier. With the child Lugia no longer a secret, they ask Oliver about it. Oliver explains that a week ago, he and Lanturn were caught in a storm while swimming. The waves were too rough and sent him under the water. Later, he found himself back on land with Silver by his side. Suddenly, the parent Lugia soon shows up in a rage. Luka notices a red light coming from her locket, and inside her Silver Wing is beaming. Oliver and the other plead their cases, and Lugia settles down. Luka watches as her Silver Wing also settles and considers if it has some connection to Lugia. The parent nudges its child affectionately, and soon the pair dive into the water. Ash is keen to watch the Lugia swim, so Luka provides everyone with the dive gear to do so. Underwater, the parent Lugia is feeding the child, who then goes towards Ash and gives him a playful headbutt. Above the water, Luka catches the parent jumping above the surface along with the child.
Back at Team Rocket's lab, Jessie and James look around a bit in their new black Team Rocket uniforms. James isn’t too thrilled about the "uncool" uniforms, but Jessie is rather blunt and declares they must finally make this plan succeed. The trio enter the room as Dr. Namba orders Butch and Cassidy to catch Lugia. He reveals that Charizard and Feraligatr have failed in his experiments to develop a Pokémon power magnifying project. Dr. Namba is feeling incredibly hungry so Cassidy orders Jessie to go fetch some food from the galley. James takes Jessie aside, and outside of the room Jessie vents her anger at being ordered around by her nemesis, Cassidy.
Luka leaves everyone for the time being while she sails to Ogi Isle to restock her supplies. As everyone rests an odd Lugia appears in the distance and calls Silver over. Ritchie is quick to spot rivets on the Lugia's body and realizes everything is a ploy. Though it't too late as the Lugia robot cages Silver in time for Butch and Cassidy to collect their catch. The Rocket trio surface in their Magikarp submarine, and soon the two Rocket gangs argument boils over into a battle. Cassidy orders out her Houndour and Jessie calls on her Arbok. Houndour blazes through Arbok’s Poison Sting attack and singes the Rocket trio. As Oliver swims closer on his Lanturn, and Ash's friends aboard a rowboat behind him, Butch sends out a mechanical arm to collect Silver's cage. Ash sends out Bayleef and she slices the claw with her Razor Leaf attack. Butch sends out Hitmontop, but Bayleef uses a Vine Whip to make quick work of it. Cassidy orders her Houndour to use Smog to create a cover. Cassidy and Butch grab Silver in its cage and begin their escape. Their large submarine sinks Team Rocket's own sub, and the large wake knocks Oliver and the others into the ocean. Ash and his friends resurface as the Smog clears. They stare hopelessly at the open waters as both Team Rocket and Silver are out of sight.