The main film's setting is in the water-themed Johto city of Altomare (which means "High Sea"), based on cities such asVenice, Italy, Amsterdam, Netherlands and Bizerte, Tunisia . The city is watched over by two legendary Pokémon, Latiasand Latios. The story behind the two involves an evil Pokémon Trainer using a Kabutops and an Aerodactyl to terrorize the citizens, until the original Latios came to the city, using his powers to drown the evil Pokémon and turning the streets into canals. However, Latios died and his children were left orphans. His soul is within a special jewel, the Soul Dew.
The Soul Dew is sought by Annie and Oakley, two members of Team Rocket (Whom Diesel works with). The Soul Dew acts as a key for activating the Defense Mechanism of Altomare, a special device built in case of disaster. Meanwhile, Ash Ketchum, Misty, and Brock are visiting Altomare on their travels. Ash and Misty participate in the Tour de Altomare, a water chariot race. Misty wins, after Ash takes a wrong turn due to an invisible Latias and Latios. Ross, the former champion of the race gives the friends a tour of the city in his gondola and tells them of the city's guardians. Annie and Oakley follow Latias, disguised as a human girl named Bianca. Latias is saved by Ash and Pikachu. Team Rocket are also in the city and decide to follow Annie and Oakley.
The trio later visit Lorenzo, the curator of a local museum, who explains the city's history and also introduces them to the Defence Mechanism of Altomare (DMA). Ash pursues Bianca, and then Latias in disguise, across the city, eventually discovering a hidden garden where Latias and Latios live. When Latios and Bianca threaten to force Ash out, Lorenzo arrives to clear up all the tension. Latias and Latios play with Ash and Pikachu, and later Lorenzo reveals to Ash the Soul Dew. However, Annie and Oakley's spy robot is watching this and later the duo steal the Soul Dew and capture Latios - using both to control the DMA. Latias flees to Ash for help, and later the two and Pikachu race across the gridlocked city to the museum. Using the DMA, Oakley locks down the city and revives the undead Pokémon to capture Latias. After a long chase through the city, Ash and Latias cause the undead Aerodactyl to crash into a building, and are saved from the Kabutops by their friends' Pokémon. The heroes arrive at the museum to find the DMA going berserk and Latios seriously injured. After freeing Latios, the Soul Dew fades and turns black, causing the DMA to shut down. When Annie tries to get the Soul Dew, it disappears and the city's water becomes a giant tsunami. Latios and Latias use their psychic powers to stop the tsunami, but Latios sacrifices himself in the process. The water returns to the city, washing away Team Rocket in the process. The undead Pokémon return to their fossil states, and Annie, Oakley, and Diesel get trapped inside the DMA.
Latios becomes a new Soul Dew and is placed as the new guardian of Altomare. Ash, Misty, and Brock head off to leave Altomare, but Bianca or Latias in the guise of Bianca (Nobody knows which) stops them before they leave and hands Ash a drawing of him and Pikachu, giving Ash a kiss on the cheek before leaving. As the group leave on a boat, they see two Latios and a Latias in the air. Annie and Oakley are sent to jail, where they examine the possessions of Lawrence III.
- Duke, Smudger, Mako, Sharky, Willy, Mr. Great White, Hiccup, Toothless, Blythe Baxter, Zoe Trent, Pepper Clark, Penny Ling, Vinnie Terrio, Sunil Nevla, Minka Mark, Russell Ferguson, and Diesel guest star in this film.
- Diesel will work for Annie & Oaklay in this film.
- The full opening from the Japanese version will be featured in this film.
- "Sticks & Stones" peformed by Jonsi, from "How to Train Your Dragon" will be the end song in this film.
- The storyline continues in The Skarloey Engines' Adventures of Pokémon: Jirachi Wish Maker.