It's the third day of Professor Rowan's Pokémon Summer Academy, and he's sent the campers to observe Water-type Pokémon living in a nearby lake. There are just two main rules: no catching Pokémon, and no leaving the area! As the Trainers begin searching for Water-type Pokémon, Pikachu sees a flash of light and spaces out for a moment, but quickly recovers. Ash and his friends continue to observe Pokémon until Angie, another Trainer on Ash's team, notices that her Shinx is missing. And Piplup falls into a brief trance after it sees the same flashing light as Pikachu!

Conway thinks this is related to the legend of the lake, which says that Pokémon vanish when the blue light flashes. Ash and his friends search for the source of the light, and they eventually stumble into a cave with an eerie green glow. At the back of the cave, Angie's Shinx is standing by a glowing pool of water, and the glow is coming from the fins of a Lumineon. As our heroes wonder what an ocean-dwelling Pokémon is doing in this cave, Jessie—now pretending to be another Summer Academy camper—barges in and declares she's going to catch Lumineon.

Of course, that's against Professor Rowan's rules, so Conway uses Slowking to drive away Jessie and her Yanmega. All the commotion frightens off Lumineon, but Ash and Buizel dive into the water and spot an underwater tunnel. That must be where Lumineon went—the tunnel lets it swim from the ocean to the cave, where there's lots of seaweed to eat. The flashing lights on its fins hypnotize the "vanishing" Pokémon, too! Professor Rowan is pleased to hear our heroes' discovery, but he also deducts points from everyone who broke his rules by entering the cave. It looks like Ash and his team will have to make up some points if they want to win at the Summer Academy!