While camping out for the night, Misty notices a light coming out of Ash's backpack. Ash gets out the Egg case because the Egg is starting to hatch. They all wonder what might hatch out of the Egg. Team Rocket, who plans on stealing the Pokémon, waits nearby. By morning the Egg hatches into a Phanpy! Ash checks it out with Dexter and wonders where its Poké Ball is. Brock reminds him that the Poké Ball is on the case, so Ash takes it and tries to return Phanpy, who jumps out of the way. Ash tries again, but Phanpy continues to dodge the beam. Brock suggests that some food might convince Phanpy to listen. Ash gets out some food, but before Phanpy could get to it, Team Rocket snatches it with an extendable hand. Pikachu shocks them with a Thunderbolt, and hits Phanpy as well. Team Rocket blasts off, and Phanpy is still a little shocked from the jolt. Pikachu tries to comfort it, but a spark sends Phanpy running. Ash tries to run after Phanpy without luck. Brock fears that Phanpy’s trust for Ash is now broken.
The group splits up in search of Phanpy. Brock leaves some food out to attract it when a bush near him wiggles about. Brock grabs at it; however, it ends up being Misty's Psyduck, with a mouthful of Brock's food. Misty yells at Psyduck, but it just looks at her with its typical blank stare. Ash and Pikachu look about, but Pikachu feels completely at fault for scaring Phanpy. Ash comforts Pikachu, knowing they'll find Phanpy eventually.
Deeper in the woods, Phanpy runs about, and the electricity is wearing off. Phanpy looks around for Ash, but then realizes it's hungry; Phanpy decides to follow a pleasant smell of food. The aroma comes from Team Rocket, as Meowth cooks toast over an open fire. Jessie and James sulk over their failure to get the Phanpy, but Meowth cheers them up a bit. Meowth goes to eat his toast but ends up biting down on his hand after Phanpy steals it from him. Meowth goes hysterical, but Jessie and James don't seem to care and start eating. Phanpy swipes their toast as well, causing them to also bite their hands. When Meowth looks around, he sees Phanpy standing there, finishing the toast. Meowth tries to scold Phanpy but it knocks Meowth to the ground with its trunk. This show of strength impresses Jessie and James. Jessie asks James to check his guidebook for details on Phanpy, and she is intrigued to hear that Phanpy is a Ground-type making it super effective against Electric Pokémon like Ash’s Pikachu. Team Rocket tries to recruit Phanpy into their team, but food bribes seem to have no effect. Meowth looks the other way for a while, with his tail waving at Phanpy, who seems to like it. Jessie and James realize the Phanpy is actually interested in Meowth's tail.
The group meets up although nobody found Phanpy. Then Jessie and James appear out of a bush, dressed up in electric-proof suits and helmets. Ash gives them a few remarks until Meowth shows up with Phanpy. Ash tries to call Phanpy to him, but James informs him that Phanpy has accepted a position in Team Rocket. Brock calls their claim out as lies. Meowth demonstrates, with his hind and tail painted to resemble Phanpy's trunk and face, Phanpy follows Meowth with ease. Phanpy gets excited and runs towards them, but Meowth quickly dodges, hitting Pikachu instead. James whips out the same mechanical hand and grabs Pikachu. He tries to shock Team Rocket with Thunderbolt, but the electricity proves useless against their electric-proof outfits. Then, James releases his Weezing to make a Smokescreen, which allows the trio to escape.
Team Rocket celebrates their catch with a toast of milk. Phanpy looks like it wants some as well, but James puts Phanpy in the same cage as Pikachu. Pikachu wipes away Phanpy's tears. The two make a plan and follow through by bashing the side of the cage, causing it to roll down the cliff. The resulting breaking sound alerts Team Rocket to the escape attempt. Meowth looks down and spots the two Pokémon running away. Team Rocket hops into their balloon and chases after them.
Phanpy and Pikachu are forced to stop because of a raging river. Ash and his friends spot the balloon floating overhead and decide to follow after. They reach the opposite side of the river just as Pikachu and Phanpy attempt to jump across some rocks to reach them. Pikachu hops to another stone, Phanpy following but misses and goes in. Pikachu grabs Phanpy with his tail, but eventually, the current pulls both of them in. Ash runs along the river to find something to get them. Pikachu grabs another rock that happens to be under a tree. Ash climbs up with a rope and tries to grab Pikachu and Phanpy. He manages to get Pikachu, but Phanpy slips away. With no other option, Ash jumps into the river, despite the waterfall nearby. As soon as he falls down, Ash tosses the weighted rope to the others. Brock manages to catch the other end, then Misty and he manages to pull Ash and Phanpy up to safety.
After the short refresher from the waterfall, Team Rocket arrives on the scene. Meowth does the Phanpy trick with his tail, but Phanpy is not so happy about Team Rocket this time. Jessie and James send out their Pokémon. Ash lets Phanpy go up for battle and Phanpy does a Rollout attack, which knocks the Team Rocket's Pokémon back. James orders a round of Smokescreen, which smothers the air. Pikachu lets off a Thunderbolt, and while it doesn't affect Jessie and James because they are wearing their protective suits, it does affect the balloon. Team Rocket only notices this detail before it is too late, and the balloon explodes and they blast off. Ash is overly happy and holds his Phanpy high in the air.