Shadi sensed the pharaoh was awake and went to check on him. He took care of some tomb robbers before confronting Yugi. He learned Yugi was a pure Light, a natural counter to Yami's pure Dark. He tried to explain who Yami was, but Yami was too wild and attacked, forcing Shadi to treat Yami like a shadow spirit that had broke free. Yugi stopped Yami from destroying Shadi, letting him escape deeply worried.
Pegasus knew the other Items had owners now and used his Eye to find them. He set up a tournament that he felt sure to win as the creator of the game. Invites were sent out to the holders. Pegasus took Grandpa Muto's soul as bait to force Yugi to play. Yugi worried, and told Yami he could do whatever he wants to Pegasus if they can get Grandpa back. Joey agrees to help. At the same time Ryou and Bakura receive their information. Bakura laughs at Pegasus' attempt to manipulate him, but agrees to go. It's a chance to get the Eye after all.
Ryou is quite nervous about the tournament as he hasn't played Duel Monsters a lot. Bakura takes the time to teach him so both can use the deck as needed, teaching him to know the cards. Ryou adopts Cat of Ill Omen as a pet to Bakura's despair and amusement, while Bakura and Diabound hunt and prepare for the tournament.
Magic is beginning to return to the world, starting with those closest to the Items. Joey is unaware but magic is waking up in him. Yugi helps Joey enter as a duelist in the tournament but Tristan and Tea have to sneak on. On the deck a competitor, Weevil, steals the Exodia cards and tries to destroy them. Joey's magic temporarily activates to hold the cards together while he tries to rescue them, but only manages to retrieve two. Once they reach the tournament island Yami takes Weevil into a shadow game. As Weevil's so fond of bugs Yami lets him be eaten by one.
Mai challenges Joey, a very sexy female that uses perfume to tell what her cards are and psyche her opponents out. Joey wins, and Yami grumpily agrees it's Joey's right to choose whether or not Mai is punished for cheating. Yugi plays a duel against a water duelist and wins.
Seto is powerful, whether or not he's in a coma from Yami. His company has major influence around the world, and with the big brother out of the way Pegasus sees a prize to capture. He takes Mokuba to use to get the company. Mokuba is furious at Yugi for his brother being in a coma. He manages to escape Pegasus, planning on dueling Yugi and proving it was a fluke that he won. Yami and Mokuba duel, Yami using his knowledge of how people function and his glimpse into Seto's soul to convince Mokuba that Seto will wake up and be fine. Unfortunately Pegasus' guards catch up and recapture him. Yami challenges them to a game, but they deflect him onto a fake Seto.
It turns out the fake Seto is the darkness Yami had banished, given form by the Eye to fight Yami. Seto wakes up at this point to learn his company and brother are under threat. He uses his skills to hack into Pegasus' mainframe and learn what's going on. He's furious that a fake Seto is using HIS Blue Eyes. Seto's rage and connection to Blue Eyes actually affects the shadow game, alerting Yami to the unusual connection between Seto and the shadow spirit. He uses it to win the duel. But Pegasus uses the loophole provided by the fake Seto playing. The fake Seto takes all the punishment, and Mokuba is still taken away. They try to stop them but they can't keep up, the guards too far ahead with their head start.
The group runs into Mai with another duelist, Rex. Rex challenges Joey on Mai's behalf. When Red Eyes Black Dragon is called onto the field Joey's magic is triggered. When Rex offers to make the duel more interesting by trading their rarest cards it turns into a shadow game. Yami's concerned, but the game is fairly mild. Joey is tired afterwards, but he won Red Eyes. As the first monster to awaken Joey's magic their bond will be the strongest. Yami explains what happens, and offers to teach Joey how to control it. Yugi's excited as this is the most human he's seen Yami act.
Meanwhile Ryou and Bakura are doing fairly well in their own duels. Ryou is even allowed a duel on his own and wins it. Ryou wishes Bakura didn't use shadow games in the tournament, but Bakura's reply is that the game was designed for shadow magic. They meet up with Yugi's group that night, Ryou nervous and trying to hide that Bakura's back. He doesn't want to fight them.
The group gets along, until Bakura tricks Yami into a shadow game with the souls of those they care for on the line, offering a taste of what Bakura suffered. The souls are sealed into their favorite cards so they are unable to interfere. Bakura learns that Ryou was entered as his penalty to his shock. He hadn't thought he cared enough about Ryou for him to be endangered this way. Ryou tells Bakura he'd rather lose than lose more friends. Desperate to keep him safe Bakura switches places with Ryou.
Bakura is stronger than Ryou, so while the punishment of being sent to the Shadow Realm still takes effect, he is able to make his way back to the Ring. It does wipe him out, so Bakura can only sleep and not do anything. Ryou doesn't let them take the Ring, he remembers too well what life is like without Bakura. Mai stumbles into their camp at this point. She actually helps, Yami grudgingly accepting that it might be a good thing that Mai wasn't punished.
That night Mai is attacked b a player eliminator. Yugi's distress over the matter wakes Yami up. he learns the player killer likes to scare people to make them too nervous to perform well and eliminate them, and tricks him into a Shadow Game of Fears. Yami thoroughly enjoys himself and when the guy loses locks him in permanent darkness with his fear like he did to others.
The next morning Joey split from the group, hoping to duel someone that didn't just approach hoping to duel Yugi. Keith, another player in the tournament, targeted Joey for a duel. Ryou stayed with the group, unwilling to separate while Bakura was so weak. Joey ends up fighting against a zombie deck, and he hates the undead. They really scare him. He has to work hard to keep it from turning into a shadow game. he doesn't want the zombies more real than they already are.
Joey wins, and the group catches up to him. Rather pettily Keith traps them in there. Bakura wakes up with Ryou panicking, and manages to find enough power to guide them through the labyrinth towards an exit, grumbling the entire time that Ryou should have left the others behind. They find they have to fight the Paradox Brothers to leave. Bakura prevents Ryou from fighting, refusing to even temporarily partner with the pharaoh. Yugi and Joey partner instead and turn it into a shadow game. When they lose one brother is made to speak only the truth, the other only lies. Using that they escape.
Meanwhile Seto has finished preparing to face Pegasus and get Mokuba back. He heads to the island where Pegasus reveals that he trapped Mokuba's soul in a card. Seto is torn between not believing and the knowledge that it is somehow real. So he agrees to Pegasus' game and challenges Yugi as told to. Yami almost kills Seto, Yugi barely stopping him. Terrified at what Yami's done to get his grandpa back Yugi resolves to finish without Yami's help.
Mai helps them enter the castle despite Yugi losing to Seto just in time to see a game between Seto and Pegasus. He's tricked into accepting Mokuba as Pegasus' substitute, resulting in him losing. His soul is added to Pegasus' collection. Yugi continues and duels against Mai. he's fighting Yami while doing so, too scared to let Yami help. Yugi almost loses, Yami only allowed to help once he promises to try and be more human. Together now they win.
Keith has managed to make it to the finals, and cheats against Joey. It results in a shadow game activating to Pegasus' surprise. He realizes the Shadow Realm is getting closer to this world again. When Keith loses his memory of the tournament is wiped. Yami steps in to help patch any damage Joey didn't mean to cause before Keith is removed. Joey and Yugi duel normally with Yugi winning. Yugi and Yami finally face Pegasus in a shadow game. They're forced to separate and keep switching to block Pegasus' mind reading but it drains Yugi as he's unused to using magic.
Yami tries to help, but Yugi's magic is Light so it doesn't work. Yugi collapses, leaving just Yami. Bakura sees an opportunity of Yami wins, so tells Ryou how to help. Ryou with Yugi's friends block Pegasus and Yami wins. Pegasus unseals the souls as promised, and is highly drained when Bakura challenges Pegasus to a dice game. He wins and rips Pegasus' Eye out. He hides the Eye and lets Ryou back out when they're back with the group, Ryou unaware of what Bakura did.
Shadi feels Pegasus lose the Eye and and comes to check what happened. Pegasus is barely alive and is rushed off to be saved. Shadi briefly checks Yugi and Yami, and is relieved to find Yami more human before going to check Ryou. He finds he can't access Bakura at all so he can't do anything. He goes to Pegasus and finds that Pegasus can still 'see' the Shadow Realm. Pegasus continues to work, so Shadi provides a new eye to help focus the ability and acknowledges that the Millennium Game has begun.
Everyone returns home. Ryou finds the Eye and freaks out, Bakura calmly telling him that it's necessary, part of the game, that all Millennium Item holders are drawn to collect the rest. Ryou asks Bakura about the game, but Bakura avoids answering, just telling Ryou to wait and see. Ryou accidentally sees a glimpse of one of Bakura's nightmares and tries to learn Bakura's past. Bakura freaks out and locks Ryou in the Ring as punishment.
In the Ring Ryou watches and notices there are spirits attached to Bakura. Once he's let out he studies the occult, and realizes Bakura is most likely how he is because of the spirits. He decides to help Bakura, finally feeling connected to him.