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Ash is a young boy who has always dreamed of becoming a Pokemon trainer. At age 11 he is gifted his first Pokemon, Pikachu, from Professor Oak.

10-year-old Satoshi, after finding a Pikachu messing with the wiring in his house, is on a journey to become the greatest Pokemon Master and to beat out his rival, Shigeru. Along the way, he meets with many other Pokemon trainers and advisors, including water-based trainer (and gym leader) Kasumi, ground- and rock-based trainer (and gym leader) Takeshi, and others.

The Team Rocket leader, Giovanni, has found Mewtwo in a remote area of the Johto region. As Giovanni tries to re-capture Mewtwo, Ash and his friends are kidnapped by Domino, a new Team Rocket member, while trying to rescue Pikachu from Jessie and James.

Dr. Fuji, a research scientist of Team Rocket, briefly describes in a prologue how his researchers uncovered a fossil of the remnants of Mew, one of the rarest Pokémon in existence, believed to be extinct (although this is not the case).

A Pokémon Collector, Lawrence III, wishes to capture the three legendary birds and follow the legend's tale. This is all part of his plan to capture the Beast of the Sea, Lugia.

Professor Spencer Hale, once one of Professor Oak's top students and a good friend of the Ketchum family, is obsessed with discovering the secret behind the mysterious glyph-like Pokémon called Unown. One day while investigating some ruins, he disappears after encountering the enigmatic creatures, leaving his only daughter, Molly, alone and lonely back at his mansion.

The film focuses on Celebi who travels to the future and brings with a boy named Sam when being chased by a hunter. Meanwhile Ash, Misty, Brock, Pikachu and Togepi are on their way to the next gym in their Johto journey and get a lift from a man named Maki who takes them to his hometown of Arborville.

The film's setting is in the water-themed Johto city of Altomare (which means "High Sea"), based on Venice, Italy. The city is watched over by two legendary Pokémon, Latias and Latios.

The story revolves around the Millennium Comet, which appears in the night sky for seven days once every thousand years. It is, at the same time, when the legendary Pokémon Jirachi awakens from a long slumber to absorb the comet's energy.