Seto Kaiba receives a call from Maximillion Pegasus, who has apparently managed to buy up the majority of KaibaCorp's shares. Pegasus holds the company ransom to convince Kaiba to come to Duelist Kingdom and Duel him.
Kaiba accepts, but Mokuba realizes this is a conflicted decision, as his brother had vowed not to Duel until he had completed their latest project: the "Worldwide Kaiba Land Project".
Once they meet, Pegasus greets both of them. Kaiba questions if the incidents were due to him, and he plays the innocent. Their Duel begins, although Kaiba is picked by a phrase Pegasus mutters just before their Duel begins: "I've been waiting a long time for this day". Pegasus still favors Toon Monsters.
Kaiba counts on the might of his Blue-Eyes White Dragon to bring him a victory, and with a few determined draws, he manages to destroy the Toon Combo.
When he confronts Pegasus, telling him that the Pegasus he knew wouldn't have been bested so easily, "Pegasus" admits not being the real one and removes a mask. Kaiba's opponent is in fact a man named Alister, who wields a new Duel Disk from this point onward and one of the 3 Swordsmen of Doma.
Alister activates "The Seal of Orichalcos", trapping both Duelists and determining that the loser of the Duel also loses his "soul".
In the meantime, Weevil Underwood and Rex Raptor, who were hidden in the extra luggage, accidentally fall out of the transport van and got themselves lost into the downtown districts of San Francisco.
Yugi and the rest travel through San Francisco and head to Industrial Illusions HQ.
Also in the English dub, after Kaiba destroys Toon World, he accuses Pegasus of using practically the same moves card for card as he used in their last Duel. Kaiba and Pegasus have only Dueled twice -- once starting in episode 26 and again in the Pyramid of Light movie. Each duel had a few cards in common with this one, but the combos differed significantly.(In the Japanese version, Kaiba tells him that he always memorizes his Duels and that he knew a way to destroy the Toon Combo.)
Turn 2: Kaiba
Kaiba draws "Spear Dragon" and subsequently Normal Summons it (1900/0) in Attack Position. "Spear Dragon" attacks and destroys "Toon Alligator". "Spear Dragon" then inflicts piercing damage to Pegasus (Pegasus 4000 → 3700). Since "Spear Dragon" attacked, its second effect activates, switching it to Defense Position at the end of the Damage Step. Kaiba Sets two Cards.
Turn 3: Pegasus
Pegasus draws "Toon Table of Contents" and subsequently activates it to add "Toon World" from his Deck to his hand. Pegasus then pays 1000 Life Points (Pegasus 3700 → 2700) in order to activate "Toon World". Pegasus then Normal Summons "Toon Masked Sorcerer" (900/1400) in Attack Position. Seto then activates his face-down "Cloning" to Special Summon a "Clone Token" with the same stats as "Toon Masked Sorcerer" (900/1400) in Attack Position. Since both players control a "Toon" monster, neither player can attack directly with their "Toon Masked Sorcerer." Seto explains to Pegasus that if either "Toon Masked Sorcerer" or the Token is destroyed, the other is destroyed with it.
Kaiba then activates "Charm of Lamentation". Now as long as this card is face-up, Kaiba can draw a card whenever one of his monsters fails to destroy one of Pegasus' monsters by battle. "Blue-Eyes White Dragon" attacks "Blue-Eyes Toon Dragon", but "Blue-Eyes Toon Dragon" dodges the attack. The effect of "Charm of Lamentation" activates, letting Seto to draw a card. On the End Phase, the effect of "Shrink" expires ("Blue-Eyes Toon Dragon": 1500 → 3000/2500).
Turn 5: Pegasus
Pegasus draws. He then pays 500 Life Points (Pegasus 2700 → 2200) in order to allow "Blue-Eyes Toon Dragon" to attack. "Blue-Eyes Toon Dragon" attacks directly via its own effect, but Seto activates his face-down "Negate Attack" to negate the attack and end the Battle Phase. Pegasus then activates "Toon Rollback" in order to conduct his Battle Phase again this turn. He then Tributes "Blue-Eyes Toon Dragon" in order to Tribute Summon "Toon Dark Magician Girl" (2000/1700) in Attack Position. "Toon Dark Magician Girl" attacks directly via its own effect (Seto 4000 → 2000).
Turn 7: Alister
At this point, Alister drops his Pegasus disguise and reveals himself; switching the copy of Pegasus' deck he was using with his real deck and replacing the two cards in his hand with two randomly drawn from his deck. Alister draws "The Seal of Orichalcos" and subsequently activates it.