Whilst on their way to Viridian City for Ash's 8th Gym Badge, Misty realizes that her Horsea is feeling unwell. Brock presumes that Horsea is dejected is because it doesn't get to swim around as much as it would like to. Misty brightens up when she remembers that the Cerulean Gym has a swimming pool, and the gang decides to take a brief detour. As they arrive at the entrance to the Gym, Pikachu points out a poster advertising an "Underwater Ballet". Misty reconciles with her sisters, and proceeds to take Horsea to the swimming pool. Horsea is ecstatic that it can swim around freely, as Misty's sisters inform her that they are participating in the Underwater Ballet.
Brock and Ash ask who the famous ballerina is, to which they point at Misty. Misty herself is shocked at this revelation, to which her sisters reveal that their show became unpopular over time. They explain that they completely remodelled their ballerina act to be underwater, and that Misty's call coincided with their completion of the show. Her sisters believe it to be fate that Misty arrived here on the day before the performance. Although she initially refuses, Misty is coaxed into agreeing by her pleading sisters. They re-enact one of the scenes from the performance, as Team Rocket arrives at the Cerulean Gym, eagerly awaiting the play. As the audience members flock into their seats, Daisy is glad they tricked Misty into becoming the lead character.
Misty is daunted by the sheer number of people in the audience. Her sisters commence the performance, unveiling a huge glass aquarium in the centre of the stadium. Misty dives off into the pool, and begins swimming gracefully alongside the water Pokémon. Misty's sisters complain that Misty has gotten a better role than them, as Team Rocket assumes their roles as the villains. When Team Rocket reveals themselves to the audience, Brock and Ash instantly recognize them. Jessie and James approach Misty, reciting their motto. To their surprise, the audience applauds Team Rocket, as they attempt to make off with the water Pokémon. Meowth detonates the roof, as their signature balloon floats into the stadium.
Jessie and James capture the water Pokémon in nets, as Misty attempts to stop them. Brock and Ash jump into the pool, as Daisy finds the sisters who were trapped by Team Rocket. Jessie's Arbok fights against Misty's Horsea and Seaking, as Jame's Weezing is released, but floats to the surface as it cannot swim. Misty's sisters release their Psyduck, which also cannot swim, much to the crowd's amusement. Ash uses his Squirtle to attack Arbok, followed by attacks from Misty's Staryu and Seaking. However, Arbok recovers and chases them around the pool. Before it can finish them off, Misty's Seel appears and begins circling around Arbok. Seel uses Headbutt several times on Arbok, finishing off with Aurora Beam.
Misty's Seel then evolves into a Dewgong, which proceeds to easily defeat Arbok with a swish of its tail. Arbok crashes into Jessie and James, and is subsequently frozen by Dewgong's Ice Beam attack. Team Rocket are then sent blasting off again by Pikachu's Thunderbolt. The audience applauds the finale of the performance, as Misty's sisters exclaim that their performances have been booked out for the next 6 months. Misty leaves her Horsea and Staryu at the Cerulean Gym, in order to perform in the act. As Ash and his friends leave Cerulean City, he commends Misty upon her great performance, to which she tells him to stop flattering her and that he still owes her a bike.
- The episode title is a reference from the Disney film, The Little Mermaid.
- This is also the only time we see Misty with long hair.
- This is also the last time Misty nags Ash about her bike in the series although her nagging is more annoyed than mad.
- This is the first episode to show Misty's Psyduck's inability to swim.
- We see in this episode more of the few non-Pokémon species.
- The "Who's that Pokémon?" in this episode is Clefairy, which is odd since in the next episode, the main Pokémon is going to be a Clefairy.
- For some odd strange reason, in this episode Arbok can battle for long periods of time underwater and not drown.
- We also see the reverse, Ash takes all the water Pokémon out of the pool yet they don't die from lack of water.
- We see in this episode that the PokéDex is waterproof and can work underwater.
"Nobody's better at stealing Water Pokémon than us"
"And next time we'll steal men's clothes" Jessie and James reveal themselves as the villains, in Misty's sisters' clothing.