While our heroes are visiting their friend Sanpei’s home in Ninja Village, Chief Hanzo is captured by a group of mysterious ninja! Their leader is Kagetomo, a gifted ninja who has decided that he should be chief in Hanzo’s place.
Sanpei and his brothers are determined to free their chief, and they confront Kagetomo and his forces head on, with the help of Ash, Serena, and Clemont. During the battle, Ash’s Frogadier evolves into an immensely powerful Greninja! The ninja force is defeated, and Kagetomo sees the error of his ways and decides to refocus on his training.
Ash and friends stay to enjoy the village festival, where Hanzo names Sanpei’s oldest brother, Ippei, as the next chief. After our heroes depart, the middle brother, Nihei, tells the others that he saw something in Ash’s Greninja that reminded him of the village’s ancient hero...
Following on, Ninja Village is under attack from the vengeful Kagetomo and the Ninja Corp. Thanks to Shinobu’s ninja body switch technique, she and Serena escape Team Rocket's capture device. The Ninja Corp’s army of Skarmory then blast Team Rocket out of the village. Meanwhile, Ash and Sanpei begin to battle against Heidayu. Heidayu's Bisharp dodges all attacks from Pikachu, Frogadier, and Sanpei's Greninja, and then attacks all three with Shadow Claw. Frogadier retaliates with frubbles and Greninja uses Night Slash, though Bisharp remains unfazed and proceeds to attack them with Snarl. As Ash and Sanpei are about to lose against Heidayu, Saizo comes in to battle with his Barbaracle. Outnumbered, Heidayu retreats using a Skarmory to escape, mentioning that he had bought enough time for Kagetomo. While Ash and Sanpei try to go after him, Saizo stops them, explaining that acting carelessly may cause them to lose their opportunity to save Hanzo. At the village, the Skarmory fleet have also begun to retreat.
At Otori Mountain, Hanzo is captive with Kagetomo and his Ninja Corp. Hanzo tells Kagetomo to remove his mask as it was obvious from the ropes tying him that it was he who had captured him. At Ninja Village, Saizo tells everyone that it was Kagetomo and his henchmen who had kidnapped the chief. He explains to Ash and his friends that Kagetomo was a powerful ninja from Ninja Village who was to be the next village chief. However, he had run away with Heidayu because he was denied the position of chief due to his thirst for power. Kagetomo had then formed a ninja force to capture Hanzo. Saizo had planned to stop him, but had come too late to save Hanzo.
Back at Otori Mountain, Hanzo asks Kagetomo whether it was the chief's emblem that he desired. However, Kagetomo says that he would not steal it, but instead, Hanzo would give it to him at tomorrow's festival and announce him as the new chief. In the meantime, one of the villagers had found where Hanzo was being held captive. Heidayu notices this and tells Kagetomo, however he is unfazed as it fits well into his plans. Ash and the group, along with Sanpei, his brothers, Shinobu, and some villagers, begin to head off to Otori Mountain. Along the way, Heidayu and some of his ninja subordinates intercept them. Nihei says to Saizo that they will handle things while Saizo and Ippei go on. A raging battle then starts between Heidayu's corps against Ash and his friends. Ash brings out his Pikachu and Frogadier while Sanpei brings out his Greninja. Both again battle Heidayu and his Bisharp.
During that time, Saizo and Ippei have reached Hanzo, and Kagetomo challenges Ippei to a battle. Kagetomo states that the winner of the battle will become chief over the Ninja Village. Ippei's Greninja and Kagetomo's Weavile then begin a fierce battle. On the other side, Ash and Sanpei are having trouble defeating Heidayu's Bisharp. After knocking Pikachu, Frogadier, and Greninja with Snarl, Bisharp runs to attack the injured Pikachu with Shadow Claw. However, before the attack lands, Frogadier jumps ahead of Pikachu and pushes back Bisharp. As it does so, Frogadier evolves into Greninja. Ash's evolved Greninja then attacks with its newly learned Water Shuriken and thereafter transforms into a special form, Ash-Greninja, for the first time. He then quickly defeats Bisharp with an extremely powerful Cut and then reverts back to his original form before Ash can understand what just happened. Clemont, Serena, Nihei and Shinobu then readily defeat the other ninjas soon after.
Meanwhile, Ippei is facing difficulty battling Kagetomo's Weavile. Hanzo silently appreciates Weavile's power but says that it lacks one thing which Ippei has. As the battle continues, Ash and the rest arrive to see Ippei battling Kagetomo. Ippei's Greninja uses Double Team which Weavile promptly removes with a powerful Giga Impact. However, in that time, Greninja emerges from the ground to attack Weavile. It then finishes off with Water Shuriken, defeating Weavile. While Kagetomo becomes angry at Weavile, Hanzo tells Kagetomo that his Weavile is far stronger than Ippei's Greninja. But Hanzo mentions that Kagetomo lacks one thing Ippei has, that is, devotion for the dreams of the people, Pokémon, and even the whole world.
Back at the village, the annual festival goes ahead as planned. Hanzo officially retires from his position and declares Ippei as the new village chief as he passes the chief emblem onto him. Later, Kagetomo with Heidayu, Hanzo and Ippei, accepts his mistakes and decides to dedicate his powers for the world. For this, Kagetomo decides to go off on a journey to explore the world. He then tells Ippei to take care of the village before leaving with Heidayu. Next morning, Ash and his friends leave Ninja Village with their best wishes. After they leave, at the underground monument for the village hero, Nihei tells Hanzo, Ippei and Saizo about Ash's Greninja's mysterious transformation. Ippei mentions that this must mean the hero from the past has saved the village again.