The episode starts off by showing the silhouette of a woman holding a little girl. In the woman's eyes she sees Ash, Misty, and Brock heading towards Saffron City. Ash and his friends appear to be lost and Ash starts yelling at Misty for not being good at directions. They start fighting and they stop when they see a small girl close by bouncing a ball. She runs off when Ash walks up to her. Ash tries to follow her and he falls off a cliff. He has Bulbasaur use Vine Whip to pull him back up. They both notice that the little girl has disappeared. They see Saffron City in the distance and Ash gets excited for his next Gym Battle.
When they enter the city, Jessie and James, disguised as Hawaiian women, kiss Ash and put leis on him. They say he is the 1,000,000th visitor to the city and they take him to a skyscraper as a prize. When they arrive there, James grabs Pikachu and Jessie pushes Ash, Misty, and Brock onto a warp tile and they end up in a room with no exit.
They figure out they were set up when a T.V. screen drops down and turns on. Team Rocket is on the screen and they remove their disguises. Ash freaks out because they kissed him. Team Rocket recites their motto, but Ash and his friends ignore them. Ash demands that they give Pikachu back. The T.V. screen shuts off, but Team Rocket didn't cut the link. As Jessie and James try to fix it, Meowth points out that a little girl got inside, the same one Ash saw before. She emits a blue aura and she freezes Jessie and James. The girl takes Pikachu and teleports to the room Ash and his friends are in. Ash thanks her and the girl starts glowing again and she points to Ash and his friends and they are teleported to outside the Saffron City Gym.
A man comes running up to them and warns them to leave immediately. Ash ignores him and enters the Gym, hoping to win the Marsh Badge. They go inside and they discover its empty at first. They open a door and they find some people practicing telekinesis. A man comes up to them and Ash asks for a Gym Battle. Misty asks the man what those people were doing. The man shows off some of his telekinetic powers by bending a spoon with his mind. Ash shows off by grabing the spoon and bending by force, making Misty and Brock turn away embrassed. The man leads them to an arena and bows in front of a gate and asks Sabrina to come out. The little girl appears, and her eyes glow red and she uses telekinetic force to make the man leave. Ash asks for an official match from Sabrina. The little girl and agrees and ask Ash if he with play with her if he loses. The gates open up and the little girl is revaled to be sitting on Sabrina's lap.
The little girl tosses out a Poké Ball and an Abra comes out and Ash sends out Pikachu. Pikachu notices that Abra is sleeping and pokes Abra to try to wake it up. Ash checks his Pokédex and it says that Abra sleeps over 18 hours a day but can use psychic powers when its sleeping. Pikachu uses Thundershock but Abra wakes up and uses Teleport to avoid it and it gets behind Pikachu. Abra then evloves into Kadabra. Ash says that's unfair. Ash tells Pikachu to fill the stadium with light so he can see where Kadabra is teleporting. Pikachu sends some lighting bolts towards the ceiling and they form a big lightining bolt and it goes towards Kadabra. It uses Confusion to send the attack back to Pikachu. Pikachu gets hit and the bolt causes lots of damage. Kadabra uses Psychic to send Pikachu up and down and hitting the ceiling. Kadabra does this seven times before Ash forfeits the match.
Because he lost, Ash has to fulfill his part of the promise by playing with the little girl. The girl uses telekinetic powers to teleport Ash and his friends to another room. They appear to be in a deserted town. They enter a house and find it empty, but there's a table with cake on it. While Ash looks around the house Brock bites into the cake and discovers that its plastic. Ash enters the bathroom and finds a woman in the bathtub and he quickly turns away. But Pikachu points to the mirror and notices that the woman is plastic. Misty says that they must be in a dollhouse when the roof lifts up and they see giant Sabrina and the little girl above them. The little girl puts her hand in the dollhouse while Ash and the others run away. They realize that they were shrunk and put in the little girl's toy box. The little girl laughs Ash and his friends run into a picture frame that has a picture of the little girl and her family in it. The little girl rolls a ball towards them and the man they met outside of the gym teleports them out of the gym to safety.
The man tries to make them leave the city but Ash refuses to without the badge. He asks the man to teach him telekinesis and the man says a person must be born with it. He tries to make Ash leave using telekinesis, but Ash still asks for help. The man tells him to go to Lavender Town and to get a Ghost Type Pokémon. The man teleports away and Ash and his friends decide to go to Lavender Town. Meanwhile, Team Rocket follows them, with Meowth pulling Jessie and James, who are still frozen.
- Since this episode was made during the Generation I era, Ghost attacks don't affect Psychic Pokémon.
- During this episode, it is stated that Ghost-Type are strong against Psychic-type when, during Generation I (the time of this episode's airing), Psychic-types were actually immune to Ghost-type moves. Similarly, in the Generation II episode Psychic Sidekicks, it is said that Psychic-types are strong against Ghost-types, although the reverse was true by then (however, Gastly, Haunter, and Gengar's secondary Poison-type does make them weak to Psychic moves).
- The book Night in the Haunted Tower is based on this episode.
- If Ash didn't released his Butterfree he would have chance, since Bug-type Pokémon are strong against Psychic-type Pokémon.
- The Gym Leader order of the anime differs from the games, with Sabrina being the sixth Gym Leader challenged instead of the fourth.
- This the first James kisses someone, in this case he kisses ash while "rewarding" him.
- The "Who's that Pokémon?" in this episode is Abra
- "So now, time for us to play."
- "It's Team Rocket! EW! GROSS! They both kissed me! Bleh! Blek blek blek!"
Watch this and other episodes: Pokémon Episode 22: Abra and the Psychic Showdown