In Hop-Hop-Hop Town, many children have been disappearing, and at the Pokémon Center, the Pokémon have no energy and seem in ill health. Ash immediately decides to 'investigate', in typical melodramatic fashion. ^_^. They work with Jenny and find that the source of the disturbance is at a Pokémon fanclub. There, the members, who live in a city and face a lot of stress each day, have a Drowzee and Hypno. To help them relax and be less stressed out, they have taught Drowzee and Hypno to modify their psychic attacks for that purpose.
They originally had two Drowzee, but one evolved around the same time the children disappearing and so forth began. The Hypno's waves, not designed to work on humans naturally, had side effects and affected other Pokémon and children (who I guess have less strong mental power than adults). When investigating, Misty leans in to look at Hypno and is hypnotised. She runs off, imitating a Seel. The children are all in a park, hypnotised into thinking they are Pokémon.
Then Team Rocket appear to steal Drowzee and Hypno. Ash's Pidgeotto sends them flying off pretty quickly, and then the psychic Pokémon are taken around to reverse the effects of their hypnosis. Order is restored to the city. Of course. ^_^. One of the Pokémon in the Center which was in pain before, still is, despite the second hypnosis. This Pokémon, a Psyduck, follows Ash-tachi and is accidentally caught by Misty. And so it begins... ^_^.