Mewtwo, his heart having been softened by the selfless example of the human named Ash Ketchum back in his birthland in the eastern Kanto region, has now traveled to the western region of Johto in search of a location that is unreachable by the prying eyes and harsh judgments of humans for the sake of his band of cloned Pokémon, with whose welfare Mewtwo is solely concerned. He eventually finds the perfect hideaway: a huge mountain named Mt. Quena, surrounded by steep cliffs that are practically impossible to scale, but in its top is a forest and a freshwater lake that makes for a near-utopia for all the Bug Pokémon living there. This is a perfect fit for Mewtwo’s band, so thus they settle in the top of Mt. Quena and begin a new, safe life, with Mewtwo watching over as their guardian, as he feels they cannot belong in the world as they were not born in it (Interestingly enough, he seems particularly close to the Pikachu and Meowth clones, possibly reflecting how important their templates were in his change of heart).
At the end of the first movie, Mewtwo erased all memory of the events from all those involved. However, due to his not being on New Island at the time, Giovanni has not forgotten about Mewtwo, and has been concocting a military plan of assault upon wherever Mewtwo has settled to take the Pokémon back for himself. He at last locates Mewtwo in his new mountain retreat and begins his operation to assault and capture Mewtwo and bend his will to Giovanni’s. The Team Rocket combat unit heads towards Mt. Quena.
Ash and his friends and Pikachu, on their Pokémon journey as always, are now passing through the area around Mt. Quena, but complications with the weather and the bus service force them to stay at a cabin at the foot of the mountain, where they would meet the Pokémon naturalists Luna Carson and Cullen Calix and the spunky young girl Domino who works for a Pokémon institute. But then a break-in and attempted thievery of Pikachu by the classic antics of the Team Rocket trio Jessie, James, and Meowth, and soon a series of turbulent events involving a scuffle on a hot air balloon, leads everyone into the airspace of Mt. Quena.