Having nearly arrived at Blackthorn City, Ash and his friends find a Dratini curled up and sleeping underneath a tree. However, when they try to get a closer look, a Gyarados appears and keeps them at bay using a Hydro Pump. A mysterious woman appears, threatening them if they try to harm the Dratini. She then introduces herself as Clair and explains that her Gyarados was simply trying to protect her Dratini. However, when Dratini begins swimming away, Clair and Gyarados leave in pursuit. Ash then runs into her elderly assistant, Kaburagi, who informs them that Clair is the Blackthorn Gym Leader, and must perform a ritual with the Dragon Fang. As they follow Clair and her Dratini upstream, Kaburagi reveals the local history: an unidentified Dragon Pokémon had terrorized local residents until it was defeated by the first Blackthorn Gym Leader, who took one of its fangs as a sign of victory. Since then, the Dragon Fang has been handed down through generations, and today is the day that they must perform a purification ritual.
Meanwhile, Team Rocket, further upstream, is relaxing when Dratini passes by. Jessie is enamored by the Dratini, hoping to catch one for herself. As James sends out Weezing, they are suddenly doused in Gyarados's Hydro Pump, and soon come face-to-face with Clair. When Team Rocket tries to threaten her, she has her Gyarados use another Hydro Pump to them flying. Meanwhile, Ash and company, with Kaburagi, manage to make up their ground with Clair. Kaburagi implores Clair to return in time for the ritual, but Clair objects, seeing as Dratini is preparing to shed its skin, a point in which Dratini are the most vulnerable. When Dratini leaves, Clair and Gyarados follow, and Ash and company have no choice but to follow them and let Dratini shed its skin before preparing for the ritual. Team Rocket, intending on stealing Dratini, is also in pursuit, though James contends that Dratini would fetch a high price either on the open market or as a gift to Giovanni, Jessie is adamant that she is keeping Dratini for herself, thinking that it is cute.
Knowing that pursuing Dratini may take the entire day, Clair takes a break for lunch. This gives an opportunity for Ash to challenge Clair, which Clair accepts. Kaburagi, noticing that Ash had won the Badge from Mahogany Town, asks them whether the rumors of a Red Gyarados rampaging near town were true. Ash and company proceed to tell them the whole story and how they met Lance. Clair and her assistant are surprised at the fact that Lance is a Pokémon G-Man, which surprises Ash, not knowing that they, too, are acquainted with Lance. Clair reveals that the two are both Dragon Trainers who had trained with each other. Knowing this, Ash and Clair are both excited about their upcoming battle. Their lunch is disrupted by an elderly couple, who wants to take pictures with Dratini. Though Clair is reluctant, she allows the couple to go near Dratini, only for the couple to trap Dratini in a net. The couple reveals themselves to be Jessie and James, while Meowth covers their escape using a smoke bomb.
While Clair is in hot pursuit of Team Rocket's balloon, Dratini tries desperately to break free by rocking the balloon. When the balloon crashes, it makes a desperate attempt to escape into the water, which Jessie quickly stops. This allows Clair to catch up. Trying to defend themselves, James sends out Weezing, but it is dispatched easily by Gyarados. Pikachu tries to Thunderbolt Team Rocket to send them flying, but Wobbuffet's Counter deflects the attack in all directions, hitting Ash, Pikachu, Team Rocket, and nearly hitting Misty, Brock, and Kaburagi. As one of the errant bolts is about to hit Dratini, Clair dives to protect it. Just at that moment, Dratini evolves into Dragonair, much to Jessie's dismay who contends that it was much cuter as a Dratini. As Dragonair is far rarer, Team Rocket presses on their attack, but thanks to Gyarados's Hyper Beam and Dragonair's Twister, they are sent flying.
Just as they celebrate their victory, Dragonair leaves, with everyone in pursuit. By nightfall, they all reach Riverhead Falls, the source of the water that leads into Blackthorn City, and the perfect place for the ritual. Ash and company are witnesses to the purification ritual, in which Clair says a prayer and proceeds to drench the Dragon Fang in the lake water. The Dragon Fang reacts and sends a dragon-shaped beam of light into the sky. Kaburagi explains that after a Dragon Pokémon dies, its body becomes a star in the sky.
The next day, Ash and his friends finally make it to the entry gates of Blackthorn City, as the Blackthorn Gym awaits.