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Pikachu's Vacation

The Pokémon of Ash Ketchum, Misty, and Brock are sent to spend a day at a theme park built for Pokémon. Pikachu, Togepi, Bulbasaur, and Squirtle cross paths with a group of bullies consisting of a Raichu, Cubone, Marill, and a Snubbull. The two groups compete against each other in sports, but it leads to Ash’s Charizard getting its head stuck in a pipe. Pikachu, his friends, and the bullies work together and successfully free Charizard and rebuild the park, spending the rest of the day playing before parting ways when their trainers return.

Origin of Mewtwo

Scientist Dr. Fuji is hired by Giovanni, leader of Team Rocket, to utilize his expertise in cloning in order to create a living weapon based on an eyelash from legendary Pokémon Mew. Fuji is revealed to be allying with Giovanni as a means to fund his side project: the resurrection of his deceased daughter Amber. In a laboratory, the weapon eventually gains sentience and is named Mewtwo. Mewtwo befriends the salvaged consciousness of Amber, named Ambertwo, as well as the clones of other Pokemon in the laboratory. However, Mewtwo is left deeply traumatized after Ambertwo and the rest of the clones decompose and die. In order to stabilize him, Fuji tranquilizes Mewtwo, causing him to forget the time he spent with his friends.

Mewtwo Strikes Back

After Mewtwo fully matures and awakens from a long slumber in a laboratory on New Island, he learns of his origin as Mew's clone from Dr. Fuji. Infuriated that Fuji and his colleagues see him as nothing more than an experiment, he unleashes his psychic powers and destroys the laboratory. Giovanni, witnessing the carnage afar, approaches and convinces Mewtwo to work with him to hone his powers. However, after Mewtwo learns of his purpose to be a weapon for Giovanni's benefit, he escapes back to New Island where he plots revenge against humanity.

After Mewtwo rebuilds the laboratory and establishes base there, he invites several trainers with hologram messages to battle the world's greatest Pokémon trainer at New Island. Ash, Misty, and Brock receive a message and accept the invitation, but when they arrive at the port city, Old Shore Wharf, Mewtwo creates a storm, causing the boats on the wharf to be closed off for safety. As a result, Ash's group are picked up by Team Rocket disguised as Vikings on a boat. After the storm sinks their vessel in the middle of the ocean, Ash and his friends use their Pokémon instead to reach New Island.

Escorted into the island's palace by the woman who appeared on the hologram, Ash and the other trainers who were able to reach the island encounter Mewtwo. The woman is revealed to be a brainwashed Nurse Joy after she is released from Mewtwo's mind control. After describing his plot to use the storm to wipe out humanity and Pokémon loyal to humans, Mewtwo challenges the trainers using cloned Pokémon coincidentally modeled after the deceased friends from his childhood. Meanwhile, Team Rocket also reach New Island and explore its inner sanctum with a Mew innocuously following them. After Mewtwo's clones effortlessly defeat the challengers' Pokémon, he confiscates them and expands his clone army. Ash chases after his captured Pikachu down the cloning lab, where Team Rocket's Meowth is also cloned. Ash destroys the cloning machine, frees the captured Pokémon, and leads them to confront Mewtwo and his clones. Mew then reveals itself and Mewtwo challenges it in order to prove his superiority.

All of the Pokémon originals battle their clones save for a defiant Pikachu and Meowth, who makes peace with his own clone after realizing the senselessness of their fighting. Horrified at the pain and anguish felt on both sides of the battle, Ash puts himself in between a psychic blast caused by Mewtwo and Mew's fighting, leading to Ash to become petrified. Pikachu tries to revive Ash with its electricity but fails. However, the tears of the Pokémon, as per a legend mentioned earlier in the movie, are able to heal and revive Ash. Moved by Ash's sacrifice, Mewtwo realizes that he should not have to be judged by his origins but rather his choices in life. Departing with Mew and the clones, Mewtwo turns back time to just before the trainers leave Old Shore Wharf, and erases everyone's memories of the event.

Back in Old Shore Wharf, the now-restored Nurse Joy has returned to reopen the Pokémon Center to shelter the trainers. The storm outside clears up, Ash spotting Mew flying through the clouds and tells his friends of how he saw another legendary Pokémon the day he left Pallet Town. Meanwhile, Team Rocket find themselves stranded on New Island but enjoy their time there.

Characters that appear only in the radio drama

Kunihiko Yuyama directed the original Japanese version of the film, while Choji Yoshikawa and Takeshi Shudo served as producer and script writer respectively. The film wasn’t produced by Pikachu Project. Shudo explained in his blog that Mewtwo being torn over his life purpose reflects the film's theme of existentialism. In the Japanese script, for instance, the moment Mewtwo realizes he has a right to be in the world just as much as any other living creature represents the central message of accepting one's existence. According to Shudo, certain episodes in the anime were intended to tie-in with the movie prior to its release in Japan and provide background behind the events in the film. However, the controversy surrounding the Denn? Senshi Porygon episode delayed the tie-in episodes, causing Shudo to expand the beginning of the movie and, thus, the length of the film.

Norman J. Grossfeld, former president of 4Kids Productions, served as the film's producer for the English-language North American version. Grossfeld, Michael Haigney, and John Touhey wrote the English adaptation, and Haigney served as the English version's voice director. The English script was heavily edited from the original Japanese one; along with various content edits, Mewtwo was portrayed more maliciously because Grossfeld felt American audiences needed to see a "clearly evil" villain rather than a morally ambiguous one. As such, the existentialist themes seen in the Japanese version were significantly toned-down.

The English version editors translated various Japanese texts, including those on signs and on buildings, into English. The Shogakukan Production Co. also altered various background from the original version of the film in order to enhance its presentation overseas. In the English dub, three Pokémon are referred to by the wrong name. Pidgeot was called Pidgeotto, Scyther was called Alakazam, and Sandslash was called Sandshrew. 4Kids said that they decided to leave the Alakazam and Sandshrew errors when they noticed it as something for the children watching to notice and because they felt it was plausible in context that Team Rocket could make a mistake.

Grossfeld also had new music re-recorded for the film's release, citing that it "would better reflect what American kids would respond to". John Loeffler of Rave Music produced the English-language music and composed the film score with Ralph Schuckett. Loeffler also collaborated with John Lissauer and Manny Corallo to produce the English-language "Pikachu's Vacation" score. Grossfeld also revealed that the English version of the film "combines the visual sense of the best Japanese animation with the musical sensibility of Western pop culture".

Toshihiro Ono, author of Pokémon: The Electric Tale of Pikachu, created a manga version of the film. Asked by editors to draw Mewtwo's birth, he received the source material to base the manga off of in April 1998 and finished the manga in May. In July of that year, a five episode radio drama titled The Birth of Mewtwo was broadcast over the five Sundays leading up to the premiere of the movie in Japan. Written by Takeshi Shudo, the drama delves into Mewtwo’s origin prior to the start of the film. It also explores the leadership of Team Rocket under Madame Boss, Giovanni's mother, and the last known whereabouts of Miyamoto (????), Jesse's mother. Due to its mature themes, it was never dubbed in English.