There is a quick recap of the adventures of Ash, Misty, and Brock as the episode gets underway. Walking along a dirt path, surrounded by trees on both sides, they debate over where to travel to next. Ash instantly suggests they head directly to the next Pokemon Gym so he can obtain another badge. Brock says that Fuschia Gym isn't too far away, only over the next mountain. However, there are so many mountains that they aren't sure which one in particular they need to cross.
Meanwhile, Jessie, James, and Meowth are sitting down for a picnic when all of a sudden the ground begins to shake violenty. Pokemon fly away, Ash and co. grab to the ground, and the prepared food of Team Rocket ends up overtturned. Upon hearing another explosion both groups run off towards it to discover its source. Once they arrive they find several large trucks making their way down a dirt path. Rocks begin to crumble on the side as trucks start to collide. A chorus of "Diglett-Dig!" begins underneath the ground. All of a sudden a single Diglett pops its head up over the earth which Pikachu notices.
Meowth also noticed from a cliff nearby. A truck driver collapses out of his vehicle, cursing the Diglett for causing them problems. He points to a cluster of them popping in and out of the ground on the road. Misty says they are cute. The truck driver snaps saying that because of them they haven't been able to finish the dam. Diglett, the movement of these ground Pokemon can be easily detected by their tracks of upturned earth. They learn from the driver that they are trying to build a massive dam to generate electricity. He says that despite their efforts they haven't succeeded in warding off the Diglett. He explains that they even put up a reward to any passing trainers in order to get rid of the pesky ground type Pokemon.
At that moment Gary suddenly appears on top of a red sports car, with dozens of other trainers in buses behind him. Gary and Ash banter back and forth about each others lack of Pokemon skill. The construction worker interrupts their conversation, reminding them about the reward for getting rid of the Diglett. The members of the Team Rocket hear this same deal from the bushes and decide to aim for the goal of the resort as well.
All the trainers are gathered around the construction site as the worker from before once again reiterates the situation. Team Rocket thinks about stealing all of their Pokemon, but are instantly disappointed when they recall that all they have on their side are Ekans and Koffing. Crestfallen, they resort to their plan B, the "principle of induced evolution". The construction worker stresses that they aren't powerful by themselves, but they are strong when they work together. Just then a herd of these Pokemon appear and topple over one the buses. Gary takes his chance to win the reward throwing his Pokeball out in front of him. However, the Pokemon seemed to refuse to come out of the ball. A Diglett returns the ball to its master. He tries again but the result is the same.
Other trainers attempt the same, but none of the Pokemon will come out of their Pokeballs. The Diglett politely return all their masters. Ash even attempts to send out Squirtle, but Pikachu halts him halfway through his throw. Gary is confused, saying that for some reason they don't want to battle the Diglett. The worker tries to bash them in with a hammer, but Gary snaps that that will never work, the Diglett are able to pull their heads in at the speed of late. With no reason to stay Gary and his fan club takes off in his car.
Later, Ash, Misty, and Brock are all relaxing in a hot spring, pondering over why no Pokemon would battle with the Diglett. To answer their questions several Diglett pop out of the ground nearby. Pikachu takes off after them. Springing to action, Ash, Misty, and Brock take off after them (somehow back in their normal clothes). Meanwhile, Jessie and James are consulting a manual on how to make Ekans and Koffing evolve. When they remember that the evolution would turn them into different Pokemon they begin to cry. After a few droplets fall on them they begin to glow a white light, their evolution process finally beginning. Jessie and James look on happily.
Back with our heroes, they look on, watching as Diglett and Dugtrio work together to plow the land and plant the trees in the entire mountain range. It is because of this that they are protecting the land and why none of the Pokemon would attack them. Luckily, the construction worker from before overheard Brock's conclusion, and decides to cancel the dam project in his new respect for nature. Suddenly, Team Rocket appears, chanting their usual motto.
Rather smug, they send out their new Pokemon, Weezing and Arbok. Ash sends out Charmander, Squirtle, and Bulbasaur to help deal with the problem. Weezing uses smog. Pikachu unleashes a thundershock attack at Arbok who avoids it and digs underground, Weezing close behind. However, while underground the Diglett and Dugtrio took care of the newly evolved Pokemon. Then together they create a wave of dirt that not only sends Team Rocket flying, but also destroys the dam in one go. Having learned their lesson once again about the delicateness of nature, Ash, Brock, and Misty all head off to the next Pokemon Gym....