Fula City was founded on barren land that was developed by humans after the Legendary Pokémon Lugia granted them the power of wind. The wind festival is held every year.
Fifty years ago, the nearby mountain forest was engulfed in flames due to humans clearing the mountain forest and looking for the mysterious Pokémon Zeraora. Harriet, the woman who built the wind power plant, burned her hand while failing to save her Snubbull from the burning windmill; she was only able to get the key to start the turbine that Snubbull was holding. This resulted in her becoming distant from Pokémon. Lugia was called to clear the fire. Hoping to protect Zeraora from the humans, the Mayor of Fula City created a lie that Zeraora had died and cursed the mountain. This secret was kept by the mayor's successor, Oliver. In the present, Oliver's daughter Margo takes care of Zeraora after it injures itself saving Margo and two other Pokémon from a rockslide in the foothills.
Former track runner Risa agrees to attend the festival to capture a wild Eevee for her younger brother Rick. Ash Ketchum and his Pikachu attend the festival and take part in the Pokémon catching contest. Callahan attends the festival with his sister Mia and her daughter Kelly. Kelly suffers from low immunity, so Callahan invents tall tales about him being the best trainer when he does not even have a Pokémon. Harriet, now an old woman, gets the essence of the Pokémon move Sweet Scent on her, resulting in Pokémon following her wherever she goes.
Getting help from the timid scientist Toren, the con artist and liar Callahan decides to give Toren's speech at his lab in return for Toren helping him win the Pokémon catching contest. A Sudowoodo Callahan took pity on begins following him. Callahan comes in first boasting about a rare Pokémon in the woods intriguing everyone, but worrying Margo. Ash places second, and helps Risa capture an Eevee.
Upset over the amount of Pokémon that have been following her, Harriet goes to Toren to ask for an antidote, but says it will take time resulting in her staying with him. Callahan is unable to make it to the speech. Toren tries to give the presentation on his own, but accidentally plays footage of him helping Callahan at the contest in time for everyone to see it. Upset over her uncle's lies, Kelly passes out from exhaustion. Team Rocket steal a bottle of the ability Effect Spore from the lab. However, the trio accidentally loses it in the woods.
Margo steals the eternal flame, a light held on the highest tower in the city to contact Lugia, to stop the festival and keep Zeraora safe and hidden. Margo tries to protect Zeraora from two poachers, but they are rescued by Ash and his friends just in time. Suddenly, the Effect Spore bottle cracks engulfing much of the forest and the city and the group decide to work together to stop it.
Callahan discovers that Mia and Kelly are trapped in a gondola while the city is being engulfed and Sudowoodo allows itself to be captured by him so that they can save the city. Toren gets to the lab and works on an antidote for the Effect Spore threatening the city. A fire suddenly breaks out in the forest, killing the electricity, but Toren uses Team Rocket's Lum Berries to create the antidote.
Zeraora awakens and begins rescuing Pokémon. While Ash and Margo decide to go follow it, Risa is tasked with taking the eternal flame back to the tower. Ash and Pikachu end up fighting Zeraora, who still distrusts humans, but Ash and Margo manage to get through to it and they try help put out the flames. Toren arrives at the power plant to give the antidote to Callahan who tosses it into the turbines while Harriet and the Pokémon turn the blades. Risa gets the eternal flame to the top, and Lugia arrives to put out the fire. Mayor Oliver revokes the lie about Zeraora's disappearance and proclaims that the citizens will peacefully live alongside it.
In the post-credits, the Pokémon Channel announcer is revealed to be Rick as Risa demands to know how he knew where she was. Ash and Pikachu head to their next location.
