On their way to Lilypad Town and Dawn's next Pokémon Contest, Ash and the gang discover a nearby village where a festival is about to occur. Lyra is one of the festival's spokespersons-and a Trainer, to boot. She introduces herself after our heroes find her lost Marill, then she escorts them to the festival. There, they meet a budding young Pokémon Breeder named Khoury, and his father, who runs the festival.

Meanwhile, Team Rocket has showed up and stolen food from the festival! When they see Dawn battle and beat Lyra in a special event where Dawn gets a Pokémon Egg as a prize, they steal it, too! But of course Ash will never let them get away with that! Everyone splits up to go looking for Jessie, James, Meowth, and Dawn's Egg. But they won't be easy to find. An angry Ursaring upsets Team Rocket's getaway plan, and Jessie winds up separated from James and Meowth during the chase.

Under the skillful leadership of Lyra, our heroes discover Team Rocket's whereabouts and retrieve the Egg, later to find out it contains a cute-but rather aggressive-baby Cyndaquil. Dawn couldn't be happier, though! Khoury and Lyra ask Khoury's father if they can go with Ash and company to Lilypad Town...and he says yes! So, for now, our heroes have added two new friends, and a baby Cyndaquil, as well!