Katara begins teaching Aang waterbending. To her fury, not only is he a fast learner, but he eventually surpasses her in skill. The group travels to a nearby town, finding a waterbending scroll at a store run by pirates. Determined to surpass Aang, Katara steals the scroll, causing the pirates to chase the group, though they manage to escape. Later, Zuko runs into the pirates. Zuko makes a deal with the pirates, saying that if the pirates capture Aang for him, he will find the scroll for the pirates. Zuko proceeds to capture Katara, and the pirates capture Aang and Sokka. A fight breaks out between Zuko's crew and the pirates when the latter learns Aang is the Avatar. During the commotion, the group escapes with the scroll.
Having received AvatarRoku's warning of the impending comet, Aang becomes anxious, worrying feverishly over the short time remaining for him to master the three remaining bending arts. In an attempt to settle Aang's fear, Katara offers to teach him what she knows of waterbending, to which he graciously accepts.
Meanwhile, Zuko is busy sparring with LieutenantJee when Iroh diverts the ship to find a port in order to replace a white lotus tile for his Pai Shogame. Venting with smoke through his nose and mouth, Zuko angrily allows him to do so. Iroh calmly announces, "It's so good to have an understanding nephew", as the smoke engulfs the bridge.
At a waterfall, Katara begins to teach Aang her knowledge of waterbending. To her displeasure, Aang immediately masters the lessons she gives him with little to no effort, despite the fact that it took her much time and practice to master them. While she tries to hide it, she begins to grow jealous of Aang's natural talent.
After Aang accidentally washes away their supplies, the trio goes into a nearby town to buy some more, where Aang impulsively buys a bison whistle. They come upon a ship docked with a barker trying to attract business. The ship's crew is selling items that they acquired by "high risk trading". Searching their wares, Katara discovers a scroll featuring several waterbending techniques, only to find that the pirates are reserving it for a wealthy client in the Earth Kingdom; however, the captain offers it to them if they have two hundred gold pieces immediately available. Aang, stating to Katara that pirates love to haggle, offers them one copper piece; when this offer is laughingly rejected, he ups it to two coppers. Katara, knowing full well that the scroll was stolen from a waterbender, slips the scroll into her possession during Aang's distraction. Immediately following this, she pleads with Aang that they should leave. Aang smart-mouths, pirate-style, "Aye, we be castin' off now", and they leave the ship in a hurry.
The pirate crew jump off the ship brandishing weapons, and begin to give chase to Team Avatar. During the chase, Aang airbends the cabbage merchant's cart into the pirates, destroying it in the process. When they escape to the waterfall they had set up camp at, Aang and Sokka find the reason they had been pursued: The pirates wanted the scroll Katara had secretly stolen. Katara claims she considers her theft of the scroll "high risk trading", mocking the pirates' obvious theft of it first. Sokka remains displeased, but Aang agrees that what is done is done, and supports Katara's desire to learn from it. One of the first techniques they try is the water whip, a simple technique where water is formed into an elongated shape and snapped at the target. Katara attempts to perform this technique first, desiring to master the new form, only to become embarrassed as she strikes herself and Momo in her first attempts. When Aang plays the role of teacher, explaining to her how to shift through the stances and succeeding in his very first attempt, Katara grows personally offended. Her jealousy of Aang's talent gets the best of her as she tells him off for his gifted skill, with stark disapproval from her brother. She quickly realizes her attitude had nearly driven Aang to tears, and regrets her actions so greatly she gives up the right to use the scroll, handing it over to Aang. Later that night, however, she succumbs to temptation and slips the scroll away to study the technique again while her brother and Aang are sleeping.
Meanwhile, Zuko and Iroh arrive at the same port visited by Team Avatar earlier that day. Unfortunately for Zuko, Iroh does not find a replacement white lotus tile from any merchant in town, but he does find numerous trinkets for music night on the ship, which three of their troops were carrying. They then come across the pirates, discovering that they were pursuing Aang as well. Zuko joins forces with the pirates to hunt down Aang, and they find Katara late at night practicing the water whip. Zuko and one of the pirates ambush Katara; he then proceeds to tie her to a tree, attempting to threaten her for the whereabouts of the Avatar. After her initial refusal, he reveals to her that he has her mother's lost betrothal necklace, the last tie that she has to her mother, and attempts to have her agree to exchange Aang's freedom for her memento. After she firmly refuses a second time, however, the pirates demand the scroll. Zuko threatens to destroy it if they do not find Aang, and the pirates begrudgingly comply and begin to search the woods for the Avatar.
Aang and Sokka are quickly found and captured, and discover Katara bound to a tree surrounded by firebenders. As Zuko and the pirates are about to make the trade, the scroll for the Avatar, Sokka convinces the pirates to call off the deal by revealing to them that Aang is the Avatar, despite Zuko's attempts to keep it a secret from the pirates. The pirates decide that they want to sell Aang to the Fire Nation, and the situation quickly escalates into a battle between Zuko and his crew and the pirates.
Taking advantage of the distraction the fighting has created, Aang, Katara, and Sokka escape. Katara and Aang use waterbending to get the pirates' boat into water and sail away. Zuko laughs at this, but the pirates, except for their leader, steal Zuko's smaller ship in turn and start chasing after them, infuriating Zuko. Team Avatar battles the pirates aboard the pirate ship, with Katara successfully performing the water whip upon re-attempting it. However, the ship is fast approaching a waterfall. Aang and Katara manage to use waterbending to stop the ship, but the pirates ram into it with Zuko's boat, sending them falling over. Suddenly, Appa, who heard Aang's bison whistle, appears and saves them from plummeting into the ocean. Back on shore, Iroh discovers that his lost white lotus tile was stuck in his sleeve the whole time. In rage, Zuko grabs the tile from Iroh's hand and throws it over the waterfall, which strikes one of the pirates on the head and bounces off.
On Appa, Katara gives Aang a full apology, while Sokka reveals that he was able to regain the scroll in the fighting. Before she could take it from him, he asks what she had learned. She says she learned to never steal, but upon reclaiming the scroll from her brother, she adds, "Unless it's from pirates", which her and Aang laugh at.
In "The Desert", it is discovered that Iroh's white lotus tile holds significance outside of being a significant piece in the game of Pai Sho, as the piece is also a symbol for the Order of the White Lotus, of which Iroh is a Grand Lotus.
In "The Library", Katara surrenders the waterbending scroll to Wan Shi Tong to be admitted to his library. The Knowledge Spirit finds the illustrations on the scroll to be "quite stylish".
This is the episode where Aang purchases his bison whistle, which appears in many later episodes to call Appa and other animals, such as in "The Desert" and "Tales of Ba Sing Se".
This episode marks the first time Katara uses the water whip.
This episode foreshadows the fact that Katara will end up being Aang's waterbending teacher.
This is the first time Aang uses waterbending along with someone else, as all the previous times he was using it alone in the Avatar State.
When Katara is attempting to form a powerful wave while teaching Aang, she fails and her attempt falls into the water. As she leans over in defeat, 'ghosting' duplicates of her movement appear.
Early in the episode, Sokka declares that the team is almost out of "the money that King Bumi gave [them]." In actuality, the money was given to them not by Bumi in Omashu, but by the inhabitants of Senlin Village.
When Katara takes the waterbending scroll out of the shelf, it was originally on the second row, right in the middle. However, afterwards when the pirate captain puts the waterbending scroll back, a thicker scroll has suddenly appeared in its previous place.
When Katara says, "Aang, can we get out of here? I feel like we're getting weird looks", her mother's necklace can be seen around her neck, despite the fact that it was currently under Zuko's possession.
When the pirates are chasing the gang, there is ice in the walkway. When the overhead view is shown, there is no ice.
When Katara and Sokka escape with Aang on his glider staff, Momo is not seen flying with them.
When Katara says, "These are real waterbending forms; you know how crucial it is for Aang to learn waterbending", the waterbending scroll is much thicker than before.
When Zuko is talking to Katara after she is captured, Zuko's belt buckle changes colors multiple times throughout the scene.
When Zuko is threatening to burn the scroll and lights a fire under it, the fire is in contact with the scroll, which would easily cause it to catch fire.
When Zuko is coming out from the smoke, he puts the scroll in his belt. When he is fighting, it disappears, then reappears in the next scene.
The pirates crash down a waterfall even though they came upriver from the seashore village earlier. There is no visible way they could have gotten their ships over the waterfall on the way up.
This is the first episode in which Aang waterbends outside of the Avatar State.
Prince Zuko makes a deal with the pirates to track down their scroll in exchange for their help in capturing Aang. Coincidentally, Dante Basco, the voice actor for Zuko, played the character of Rufio, leader of the Lost Boys, in the movie Hook.
This episode is one of two episodes in which Zuko laughs, the other being in "The Headband". Zuko rarely laughs in the series because he is often angry and ill-tempered.
This is the second episode where the cabbage merchant appears.
This one of the few episodes where graphic censoring is done; when the pirates are riding away in Zuko's boat, one of the pirates is about to drop his pants to moon Zuko. The first instance of censoring was in "Winter Solstice, Part 1: The Spirit World", when Iroh stands up from the hot springs naked and Zuko's hand censors his uncle's nudity.