Continuing their journey to Coumarine City, our heroes arrive at a strangely shaped mountain known as Grace Tower. When a Malamar appears out of the woods, our heroes are wary—after all, an evil Malamar once hypnotized them as part of a sinister plot—but this one turns out to be part of a large group of friendly Pokémon living happily together in the forest.
However, the evil Malamar is nearby, and this time it has allies! Thanks to James's Inkay, the Team Rocket trio are the first to discover it. At the urging of Officer Jenny, who's been tracking the evil Malamar ever since their previous encounter, Ash and friends join forces with Team Rocket to thwart Malamar's plot to take over the world!
The battle is fierce, but the three evil Malamar are defeated, mostly thanks to the strong bond between Inkay and James. Unfortunately, the Malamar escape once more, vowing to return and carry out their evil plot...
As Inkay is eating a croissant along with Team Rocket, Jessie comments on how fast he is eating, but James knows he is because Inkay absolutely loves croissants. Just then, Team Rocket notice Ash and his friends and begin formulating a plan to catch Pikachu. The scene then transitions to Ash and his friends who are talking about UFO sightings at Grace Tower, although Clemont, being a man of science, dismisses the statement and says the sightings weren't actually UFOs but merely people's eyes playing tricks on them. Just then a rustling is heard from the bushes and a Malamar emerges.
Ash warns the others to not look at the lights on Malamar's chest as they each recollect on the events of A Conspiracy to Conquer!, since the last Malamar they encountered was an evil Pokémon. Instead of doing anything to the group, however, the Malamar floats away. Soon, Ash and his friends witness a group of Inkay, Malamar, Flabébé, Bidoof, and Ledyba living peacefully together in a forest, and even sharing berries, making them realize they were wrong to assume that Malamar as a species are evil Pokémon. Team Rocket is watching from a different side, notices the group of Pokémon as well, and realize they were wrong too, making Inkay pleased there are others of his kind around. Just then, three trucks speed past, almost running over everyone and causing much animosity on the part of Ash and his friends. Inkay is also very angry and senses something so he pursues the trucks with Team Rocket following.
Inkay is seen speeding up the mountain with Team Rocket not that far behind. James wonders what has gotten into his Pokémon and Jessie asks Meowth to translate. Once they reach the top of the mountain, Team Rocket sees the trucks from before, along with six strange devices. James remembers seeing them somewhere before, but he can't remember where. Just then, James sees a Malamar emerge from the truck, recognizing it as the Malamar that hypnotized him and the rest of Team Rocket (except Meowth) before. Just then, two other Malamar show up and the three begin cackling. Inkay is furious and begins shouting in extreme agitation, with Meowth unable to translate because Inkay is too agitated. Jessie and Meowth argue with James that Inkay may be on the Malamar's side, which grabs the unwanted attention of the three evil Malamar. The Malamar that appeared previously, the leader of the group, orders the other two to go after Team Rocket.
Team Rocket run down the mountain quickly but end up crashing in front of Ash and his friends, who think they've come to steal Pikachu again. A lady then tells everyone to hide with her. She then reveals herself to be the Officer Jenny they met during their first run-in with the evil Malamar. Inside a cave, she informs the group that she began a top secret investigation on Malamar after the terrifying incident at the radio observatory. She reveals that these Malamar are somehow highly intelligent as they were able to track down some of the Kalos region's most distinguished scientists and forced them to create large energy crystals and use them as a weapon similar to the one at the radio observatory. However, Officer Jenny is completely uncertain what their true objective is. Soon after, a large quake causes them all to run out of the cave and see the six devices on top of the mountain, supporting a large sphere of energy. Before the group can formulate a plan to stop it, however, the Malamar discover them and capture everybody except James, Inkay, Meowth, and Clemont, who manage to escape thanks to Inkay, who spit in the Malamar's face before it could capture them.
In the forest, Clemont thanks Bunnelby for helping with their escape with its Dig. Inkay is still furious and Meowth is finally able to tell that it is because Inkay is unable to get over Malamar hypnotizing James in the past. Meowth apologizes to Inkay, as he originally believed Inkay was in cahoots with the evil Malamar. Inkay then goes off to get help from the Pokémon in the forest. The good Malamar are skeptical of Inkay's story at first, but when one of the evil Malamar arrives and attacks their friends, they retaliate and agree to help stop the evil Malamar's plan.
Meanwhile, the Malamar are boasting about the true nature of their "final project" to their captives on top of the mountain. Using the six devices, the Malamar are aiming to alter the world's environment drastically in order to create a world that is best suited for them, although such a world would almost certainly not benefit any other parties. As the countdown progresses, James, Inkay, Meowth, and Clemont arrive in time with the group of Malamar and Inkay they befriended, thus taking the evil Malamar by surprise and freeing the others from their control. One of the evil Malamar then seizes Inkay and hypnotizes him to turn him against James, but the bond between James and Inkay is too strong and James manages to bring his friend back to his senses. With the combined power of Inkay, the wild Pokémon, Officer Jenny's Manectric, and Pikachu, the three Malamar are defeated easily and their final project destroyed, but not before they escape with the devices and promise that they will eventually succeed in their plan before heading into the future.
Back in the forest, the Pokémon are playing happily, and then one of the Malamar motions for Inkay to come and join them. Inkay is led into the forest by the wild Inkay, who see it as one of their friends. Seeing this, James believes that Inkay would be happier here in the forest than traveling around with him, but Inkay rebukes him, stating in no uncertain terms that nothing makes him happier than traveling around with him and Team Rocket. At this, James is overcome with emotion and embraces Inkay happily.