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The movie starts off with Lawrence III, a man with a very large, flying Pokémon capturing machine, revealing his plan to capture a very rare Pokémon by disturbing an ancient balance described in a legend. This balance is that of the powers of the three legendary bird Pokémon: Articuno, Zapdos, and Moltres. (Each of the Pokémon lives on one of the orange islands) He does not mention, however, that the legend also states that once the balance has been disturbed, global destruction will begin, and a "chosen one" will arise to mend the imbalance. Before the title of the movie appears, Lawrence captures Moltres, which begins to set the legend into motion.
Ash and his friends, Tracy and Misty, start off traveling to a vacation spot on an island via a small boat, captained by a girl with green hair who owns the boat, Marin. Ash reflects on how well he has been doing with his training, Tracy sketches, and Misty plays with Togepi. Everyone is happy and relaxed... except for Pikachu, who from the beginning of the movie, seems to be keenly aware of something unusual.
Back at Ash's home, Prof. Oak stops by Mom's (Ash) house with his bicycle. They talk for a few moments, until an unusual storm comes by that has rain and snow, in the middle of summer. Following the storm, herds of Pokémon go by heading for some unknown location.
While Ash & friends are on the way to their vacation, they also run into an unexpected, severe storm which throws them off course and onto another island (Shamouti Island, Center of the Orange Islands). Team Rocket also encounters the storm as they are following Ash in their Magikarp submarine. On the island, they meet a group of people who appear to be a savage tribe, but turn out to be a group of people taking part in a special activity. Marin recognizes an old friend in the crowd, Carol, and she explains that they are celebrating a legend that foresees a "chosen one", who is a Pokémon trainer, landing on their island and saving the Earth from destruction.
Then, Carol introduces Marin to her younger sister, Melody, who seems like a "rebel teenager" (no offensive to any 13-16 year olds). Melody plays a major role in the celebration ("Festival Maiden", which her older sister used to play when she was younger) by presenting the "chosen one" (Ash) with his mission and playing a special song when he succeeds. Melody appears very uninterested in her role, as she announces that she is up on a ledge when Carol looks for her. She asks when they are all going to get over the "dorky tradition".
Noticing that Marin was not alone, Carol asks who Ash and his friends are. When Marin mentions that Ash is a Pokémon trainer, the crowd cries out "Pokémon Trainer?", and a man emerges from them declaring that Ash is the "chosen one"; He reassures Ash that his role is just for the tourists when Ash appears nervous by his sudden position.
Melody comes down from the ledge she was on, and approaches Ash. She mocks him, saying, "So, you're a Pokémon trainer, huh? I guess he'll do. Well, here's you ceremonial kiss!", and kisses him on the cheek. Misty gets very annoyed, not because Melody kissed him, but because Melody then turns to mock Misty, asking her if she is his sister or girlfriend. Misty is "grossed-out" by both questions.
The man from the crowd declares again, that Ash is the "chosen one", and they all depart, heading back to the city. Ash and his friends go with the crowd to feast and dance for a while. As they are eating, Misty mumbles to herself about how absurd Melody's remarks were. Suddenly then, Melody appears on a small stage in a dress and plays the "Guardian Song". She then goes to Ash and presents him with his mission: to go collect three crystal balls from three different islands (Fire, Lightning, and Ice Islands - The other three of the Orange Islands), bring them back, place them in a shrine, and listen to her play the "Guardian Song" again. Melody explains that he does not have to embark until the next day, but being as ambitious and stubborn as Ash is, he insists on going that night. Marin says she admires Ash's attitude, and volunteers to taxi Ash to the islands. Ash asks Misty if she wants to come, but she refuses, making it clear that she is still upset by Melody's remarks.
Meanwhile, Team Rocket are staggering over to Shamouti after their sub was wrecked by the storm smashing it into a rock bed. As they are nearing the shore, Ash and Marin speed past them, knocking them into the water, all without noticing them. Team Rocket grabs onto the remains of their sub to stay afloat, when the storm suddenly grows severe again.
Elsewhere, Sloking (not identified in the movie at the point) is standing at the mouth of a cave, gazing out into the storm. He says to himself, "Distrub not the harmony of Fire, Ice, and Lightning... sigh... what a mess..."
Back at Shamouti Island, Melody worries about Ash and Marin being out in the storm. She tells her sister, Carol, that she wants to take her boat to look for them, but her sister questions about any effect that course of action would make. She ignores her sister's warning, and leaves the island with Misty and Tracey. Little do they know that Team Rocket stows on-board their ship, attempting to get a chance to capture Pikachu.
[L3's computer detects zapdos - Prof Oak watches storm news]
While Ash and Marin are heading for one of the islands, the storm stops, but the waves get more intense. While struggling with the storm, the rudder of the boat is destroyed, and they crash onto Fire Island. Ash braces himself to a pole and catches Pikachu, nearly falling off from the force of the crash. Once the boat has settled, he looks torward the island. A huge mountain which is highest at the center of the island, nearly covers it, and an immense staircase which is built into the mountain leads to the Fire treasure (unknown to the characters). Pikachu jumps off the side of the boat and runs torward and up the massive stairs. Marin warns Ash not to follow him because the storm may come back soon, but he ignores her warning and runs after Pikachu.
After eating for a while inside the cabin, the ship rocks back and forth momentarily, throwing Marin off balance. When she goes out to see how bad the storm is getting, she sees Melody with Misty and Tracey in their speedboat, stuck on top of a rock. They ask Marin where Ash has gone, and she explains to them that Ash went up the mountain with Pikachu.