While preparing to enter the Verdanturf Town Pokémon Contest with Skitty, May and the others are amazed when they encounter her rival Drew who announces that he is not going to enter as his Roselia is injured after a battle with a Dusclops belonging to a masked Coordinator. He warns the gang to watch out for the mysterious Coordinator who goes by the name "Phantom". Meanwhile Team Rocket are also in training and Jessie is preparing to enter Dustox into the Verdanturf Contest.
Soon however, Phantom approaches Ash and the gang and challenges them to a battle, Ash accepts the challenge and pits Pikachu against Phantom's Dusclops. Ash attempts to use Normal-type attacks against Dusclops but, being a Ghost type it is unaffected. Dusclops deals heavy damage to Pikachu and it seems as thought Phantom will win the battle.
However, a car pulls up and Phantom flees, a large middle aged woman chases after him but soon loses him. While running away, Phantom cuts his hand on a stray branch. The gang catch up with the woman and she reveals that she is concerned for her son Timmy who has been skipping school and hanging around with the mysterious Phantom. The gang agree to reveal the identity of the Phantom so that he can be punished and stop influencing Timmy. Team Rocket overhear the conversation and also begin searching for the Phantom.
The gang are taken to Timmy's house where he is seen to be making notes on a tough Pikachu he battled that day and also has a cut on his hand. Timmy's mother notices these details and realizes that Timmy may be the Phantom. Timmy's mother makes it clear that she doesn't want Timmy to be a Pokémon Trainer but instead wants him to CEO of her company when she leaves.
Timmy's father is then revealed and tells the gang that he was once a great Pokémon Coordinator but when he met his wife he was forced to give it up because she hated Pokémon. However, his love for Pokémon remained so he created the Dusclops costume and entered Pokémon Contests as The Phantom whenever he was out of his wife's sight. However, Timmy's father gave up coordinating when his secret became too hard to keep and put his costume away. Until one day Timmy found a stray Duskull and his father made him a new Phantom costume so he could train in secret and become a Coordinator.
The gang formulate a plan to help Timmy enter the Verdanturf Contest; Brock dresses in the Phantom costume and challenges May to a battle with both Timmy and his mother present. She begins to believe that Timmy is not the Phantom but Team Rocket appear and attempt to reveal Brock as the Phantom to claim a reward from Timmy's mother. Jessie's Seviper constricts Brock making him unable to hold his mask on. Skitty uses Blizzard to blow Seviper away but Brock falls to the ground and reveals his face to Timmy's mother for a second. Pikachu uses Thunderbolt to dispose of Team Rocket and Timmy's mother seems to believe the trick saying that she knew Timmy wasn't the Phantom and returning to work. The stage is set for Timmy and May to enter the Verdanturf Contest as rivals...