A meteorite flies to Earth, crashing and making an explosion. A man and a woman go to inspect the meteorite, so they go inside a vehicle to go to the site. They find the meteorite and launch the rockets. A Pokémon frees itself with a blue light. They go to capture it, but the Pokémon evades and uses Psychic, levitating the vehicle. A beam from the vehicle is fired, hurting the Pokémon, but something happens - the Pokémon glows with a red light, calming the man and the woman. The Pokémon goes to the nearest village.
The gang is seen walking to get to Lilycove City. They go to the Pokémon Center in Volley Town. Team Rocket eats some rice balls and Meowth heard of a meteor that fell somewhere near them. They plan to steal it, earning a promotion. The gang arrives to Volley Town, although it is unusually very quiet. They go inside the Pokémon Center, but see nobody. Nurse Joy appears, with red eyes. The gang asks for bed for the night and to rest their Pokémon, but Nurse Joy refuses (having a strange voice). During the night, they walk to get rest. Brock thinks that Nurse Joy was a "fake" one, she was acting very weird. They first go to eat dinner. During the dinner, Lombre goes away, seeing something.
Lombre is being captured. The gang tries to convince the men that it is Brock's Pokémon, so he sends it back to its Poké Ball, proving the men. The men undisguised themselves - they are Ken and Mary, the ones who got on Clefairy spaceship. Ken says they went to capture the Pokémon from outer space and went to get the meteorite, but don't remember anything - they think the Pokémon erased their memories. They suspect the same Pokémon erased the villagers' memories, so they put some special helms to protect from psychic activities. They go away to get it. Brock tells he heard stories that Clefairy and Starmie are from outer space, but is concerned for what it did on villagers.
The gang goes inside the Pokémon Center to investigate. Team Rocket appear as well, since they found nothing at the meteorite site, they think something in the meteorite is in the Pokémon Center now. They go inside by breaking the window. James finds his flash light (which he lost) and turns it on, so the gang sees some movements. Team Rocket appears before them and Meowth mentions that they are after the meteorite. They all go inside a room when they heard Nurse Joy's voice. Suddenly, they hear something - James turns the flash light on and sees the Pokémon - the Lunatone. Jessie comes to Lunatone, but is affected by its red light and orders everyone to get out.
James and Meowth shake her, making her come to her senses. Lunatone used Hypnosis on her and the other villagers. Meowth translates Lunatone was scared. Nurse Joy appears before them, saying they should get out. Team Rocket plan to get Lunatone, so James sends Cacnea to use Needle Arm and Jessie her Seviper to bite Lunatone. Lunatone uses Psychic, but after a while, fails and falls down. Nurse Joy comes to her senses. Meowth translates that it used so much Psychic attacks it got its energy depleted, but mostly because of the attack from Ken and Mary. Lunatone says it needs moon light to be healed.
Nevertheless, Seviper goes to bite and Cacnea uses Needle Arm, but They (along with Jessie, James and Meowth) are blasted when Pikachu used Thunderbolt on them. Nurse Joy treats Lunatone, saying it will feel better, but it needs moon light to get its energy back. The full moon is tonight, but the deal is that moon can't be seen from Volley Town. Nurse Joy mentions the Camerupt Point where they could place Lunatone to restore its energy. However, Brock reminds that Ken and Mary are still after the Pokémon... The gang is seen pushing a cart, while inside Lunatone and Pikachu are to hide it from Ken and Mary.
They encounter Mary and Ken and play dumb, saying they are going to Camerupt Point where they'll have a Moon party there. Ken and Mary let them pass, but suspect they hide something, so they assemble a machine to get a mystical Pokémon. The gang reaches the Camerupt Point, all they need is to wait for the moon to show. Pikachu and Lunatone go out and they see the moon going up. However, it is only Team Rocket in the balloon. They release a hand to get Lunatone, but another one goes to negate theirs - it is Ken and Mary inside the vehicle.
Each side identifies the other and begin to argue. Ken and Mary's vehicle begins to spin Team Rocket's balloon and releases an electric surge, blasting them off. Next, they go after Lunatone. Pikachu uses Iron Tail, but the attack is cancelled when the vehicle's arm hurts him. Brock sends Mudkip to use Water Gun, but nothing happens, only that the arm knocks Mudkip out. May sends Beautifly to use Silver Wind, stopping Ken and Mary. Mudkip uses Water Gun and Pikachu Thunderbolt, shutting the vehicle. Soon after, the moon rises, powering Lunatone up.
However, Ken and Mary's machine is not stopped. They go to capture Lunatone, but Lunatone uses Hidden Power, blasting Ken and Mary off. The gang waves goodbye to Lunatone as it goes away.
- Featured Pokémon: Illumise, Gulpin, Parasect, Lanturn
- The design of Mary's Pokédex is based on the Game Boy Advance SP. It uses the "Dexter" voice rather than the "Dextette" of Ash's Hoenn Pokédex.
- When Brock shows the others a book with pictures of other Nurse Joys, the one from The Joy of Pokémon is shown.
- The episode name is a play on the phrase, "crazy as a lunatic," or "crazy as a loon."
- At the beginning of the episode, a classic Pokémon identification can be seen. In this case, it is a Venonat.
- When Chimecho appears during Team Rocket's motto, it seems to have two "spikes" on its "back" rather than one.
- During the battle between Team Rocket and the Lunatone the 'R' on Jessie's shirt is reversed.
- Either there are two Pokémon Centers, or the scenario of the Pokémon Center changes from one place to another during the episode. At first, when the group enters the Center, there's a building behind them. Later, they are hiding behind a bush, right where the building was.