Cerulean Blues (Japanese: ハナダジムのリベンジマッチ Revenge Match at Cerulean Gym!) is the 7th episode of Pokémon Chronicles.
Misty cycles with Togepi back to Cerulean City, since her sisters passed her the title of the Gym Leader. Misty plans on eating first, but when arriving to the city, she sees a report that two inspectors of "PIA" are starting to close the Gyms, if the place does not meet their expectations. Misty hears they are going to Cerulean City soon, and fearing it will be closed, Misty speeds up. Misty, however, is seen by Kim, Kai and Kail, who remember she defeated them when they were working for Team Rocket, so they promise to take their revenge on her. Misty comes back to the Gym and hears some people. Inside, a Gyarados stirs trouble, while some people are watching it in fear and one of them falls into the water, then gets chased by Gyarados. Misty asks who they are and is told they are fans of Misty's sisters, who are not at the Gym. The fans, therefore, have been put to look after the Gym before Misty came back, but Gyarados is too much trouble for them.
Nurse Joy thinks Misty could find a way to calm Gyarados down. Gyarados dives in, creating a wave, which soaks everyone. The man is still chased by Gyarados, so Misty goes to call Gyarados in its Poké Ball. Nurse Joy doubts Gyarados would obey when it is angry, so Misty decides to battle Gyarados by sending Politoed, though Psyduck comes out as well. Psyduck, however, cannot swim and is pushed out of the water, including the man. The fans are too scared and run out of the Gym. Misty goes under the Gym, hoping others are not in danger. She sees Starmie and Horsea, who visit Misty, but are chased off by Gyarados. Nurse Joy reminds Misty to have the Gym in order, she'd have to get Gyarados obey her. Misty admits Water-type Pokémon are special to her, but Gyarados is an exception. When Misty was a baby, she crawled her way into a Gyarados' mouth. Gyarados woke up and spit Misty out, who became terrified of Gyarados ever since. However, Misty decides to take a step to make the Gym proud. Kim, Kai and Kail overhear Misty and have a perfect plan.
Misty, dressed as a mermaid, hopes Gyarados, who played in a show as it was a Magikarp, remembers Misty by her costume. Misty is terrified, but Nurse Joy tells her to be brave. Misty dives in and is approached by many Pokémon of the Gym. Misty decides to dance with the Pokémon underwater, but Gyarados makes a screeching sound and swims off, creating a whirlpool around Misty. Misty starts drowning, but is pushed by Horsea. Misty runs out of air and starts dreaming of Ash and Brock, who are glad to know Misty became the Gym Leader and are certain she will be a good one and resolve the crisis herself. Misty tries to go to the boys, but is binded by Gyarados and screams. Misty wakes up, seeing it was only a dream and is given tea by Nurse Joy. Nurse Joy thinks it would be wise to separate Gyarados from the pool until it calms down. Later, Misty tries to call Gyarados in its Poké Ball, but Gyarados resists and dives. Since she has no other options, Misty captures Gyarados in a cage, but Gyarados starts furiously tackling it. Since nothing happens, Gyarados uses Hydro Pump, so Misty starts doubting if she is fit to be a Gym Leader.
Suddenly, Kim, Kail and Kai present to the people of the Cerulean City a match against Misty, for the winner will be the Gym Leader. They claim Misty cannot be the Gym Leader, as Gyarados cannot obey her and they think the Gym would prosper if they were in charge. To prove them wrong, Misty decides to battle them. Misty battles against Kim on a three-on-three match. Misty sends Staryu and Kim Hitmonchan. Hitmonchan starts drowning, so Staryu goes to help him out. However, Hitmonchan was just pretending and hits Staryu. Misty claims that was cheating, but Kim considers that a method to win. Nurse Joy, however, claims it was an illegal move and declares Misty as the winner. For her next Pokémon, Misty sends Corsola, while Kim his Tentacruel. Tentacruel starts with Bubblebeam, hitting Corsola, who uses Recover to heal itself. Corsola goes to tackle Tentacruel, but Kail and Kai send their own Tentacruel, hitting Corsola. Nurse Joy claims that was rule violation, but Kim reminds Misty she accepted to have a battle with all three brothers. Misty just replies Kim is a coward not to battle alone.
Tentacruel uses Poison Sting, hitting Corsola and bashing it to a rock, upsetting Gyarados up. Misty dives to save Corsola, while Nurse Joy bans the brothers from all the official battles, for circumventing the rules. However, the brothers are not done, as their Tentacruel use Poison Sting on Gyarados. After saving Corsola, Misty dives in to save Gyarados and takes the hit from Poison Sting. Gyarados is furious, seeing Tentacruel attack Misty. Gyarados bashes the cage, destroying it and saves Misty from drowning. The brothers are not impressed and have Tentacruel attack Gyarados, who uses Protect, then Hyper Beam to blast Tentacruel off, then does the same with the brothers using Hydro Pump. Misty thanks Gyarados, who lets Misty call it in the Poké Ball. Nurse Joy thinks Misty has proven to be a fine Gym Leader. She also admits Misty passed the test, for Nurse Joy came here as an Pokémon Inspection Agent, the PIA.
Later, Nurse Joy confirms going to Hoenn and visit their Gyms. Misty asks Nurse Joy should she see Ash, to let him know Misty became the Gym Leader. Nurse Joy promises to do so and leaves, while Misty bids Nurse Joy farewell and thanking her for help. Misty stands proud, wanting to let Brock and Ash know she succeeded. Later, Misty dives in the pool, ready to start the training with her Pokémon.
Misty reads the title card on the episode.
The events of this episode imply that Misty never was a Cerulean Gym Leader prior to this episode, but in The Water Flowers of Cerulean City, she told Ash that she was a Cerulean Gym Leader as well.