The episode starts at the gym at Kadic Academy, where Milly and Tamiya are reporting for The Kadic News with a video camera. Tamiya originally holds it upside-down but fixes it upon Milly's request. After introducing herself, Milly starts talking about the Annual School Prom. Milly says they weren't allowed in the gym due to some reason, but suddenly, Sissi comes in, and Milly asks her for a few words. Sissi then insults Milly and Tamiya as Herb covers up Tamiya's camera, and Sissi informs Milly that she won't be able to find a partner. Milly asks Ulrich, who is nearby, but he denies her request because he promised to go with Yumi. Sissi then tells her to go to the "sandbox dance", and Milly runs out crying. Yumi sarcastically tells Sissi that she hopes she’s proud of herself while Odd and Ulrich stare at her, clearly disappointed in how heartless she was.
Meanwhile, Jeremie is in his room talking to Aelita. Jeremie then tells her he's making progress with his materialization program. Aelita then gets overexcited and starts exaggerating with her facial movements, and Jeremie tells her that soon X.A.N.A. won't be able to harm her or the rest of the Lyoko Warriors.
In her room, Milly is crying while hugging her teddy bear, and tells Tamiya she hates all of them. Unbeknownst to the two children, X.A.N.A. sees Milly from her computer screen and registers her emotions of anger. Milly then runs out of her dorm crying, saying that she's sick of Tamiya as well. In the gym, noticing how "gloomy" Ulrich appears from earlier, YumI tells him that she wouldn’t have minded if he had gone with Milly. Ulrich then says that if meanness if one of the qualities of a beauty queen, Sissi will get reelected. Jeremie comes over and says they should try to get Miss World, i.e. Sissi to see that. Odd then comments on Jeremie's statement, saying Sissi is more of Miss In-her-own-world. Sissi is mad at such an insult.
In the Garden Shed, Milly is talking to her teddy bear. Although she doesn't realize it, the electricity is going haywire. Tamiya then comes over and tells Milly to get out of the Shed, and that they have work to do. Just after Milly leaves the shed, a spectre comes out of a lamp and possesses the teddy bear.
Meanwhile, Sissi goes to her room, and shoos Herb and Nicholas away, and seems pleased with herself. She then goes into her dorm, takes off her clothes, and puts on some music, then goes around trying to find some clothes to wear at the dance. Whilst she is putting on makeup, the teddy bear, now under X.A.N.A.'s control, climbs to the top of one of Sissi's shelves and pushes down a bunch of bottles on her. Sissi then runs out of her dorm to her dad, and Odd suggests to the rest of his team to check Sissi's dorm in case it is X.A.N.A.
At Sissi's dorm, they converse about her various appliances, and Jeremie suggests it is a short-circuit. After taking pictures of the dorm, Milly and Tamiya go back to the Garden Shed to pick up Milly's teddy bear only to find it missing. Jim then yells at the poor seventh graders for being in an area that is "no place for children", and Milly gets into a heated argument with the gym teacher. Jim then grounds both of them in their room. Milly then goes and cries in the Courtyard, and Odd goes over to comfort her. They then look at the photos of Sissi's dorm, and find out that the teddy bear is under Sissi's pillow. At the same time, Jim is attacked by the teddy bear for yelling at the two kids.
Odd goes to Sissi's dorm and doesn't find anything. In the infirmary, Mr. Delmas is talking to Jim. In the Gym, Yumi and Ulrich converse about the strange happenings. Meanwhile, Odd goes to Mr. Delmas and asks who attacked Jim. Mr. Delmas then says they don't know, but Jim can use a little rest (and maybe some therapy). Mr. Delmas then puts a paper in the trash bin, which Jim drew on. Odd takes it out and finds out Jim drew a teddy bear.
Outside, the three boys are talking about X.A.N.A., Jeremie then says one of them should go to Lyoko, and Ulrich decides Odd and Jeremie then says they should go to the Factory whilst Ulrich guards the school. The genius and his purple friend agree, and soon they have crossed the Seine and are at the Factory. Odd gets transferred by Jeremie, ending up in the Desert Sector. At the same time, Ulrich finds out the teddy bear has left the school.
In Lyoko, Odd meets with Aelita, who shows him a gaping hole in the ground. On Earth, Ulrich finds out the bear has already gone onto the street, and discovers that Yumi must be his target. Aelita and Odd then look down the hole, but before they can explore, five Kankrelats attack them.
On Earth, Ulrich is calling Yumi, but she doesn't answer, because she's taking a bath. In Lyoko, Odd and Aelita are fighting the Kankrelats, but Odd suddenly sees a vision of Aelita falling into the Digital Sea. Ulrich quickly gets Yumi, who has dressed up, and runs away from her house with her. On Lyoko, Aelita falls down the hole, but Odd saves her. In the process, they discover a tunnel.
Back in the real world, the bear is causing mass havoc. Ulrich and Yumi proceed to Kadic to evacuate the school. Odd and Aelita are going down the tunnel when a Megatank rolls in, and in the process, they find the activated Tower. Although Aelita could deactivate it then and there, Odd decides they should kill the Megatank first.
On Earth, Ulrich goes into the gym, and bumps into Jim, who tells him to look better next time. After bumping into Sissi, the beauty contest starts, so she leaves while her cronies laugh for some reason. Sissi goes up to the stage and starts bumping into the other candidates, but before anything can proceed, Ulrich grabs the mike and tells them they should evacuate because of the teddy bear with Jim agreeing. Sissi then says it's all a trick to stop her from winning, but then the teddy bear attacks, and the students are all sent screaming.
In Lyoko, Odd kills the Megatank, allowing Aelita to enter the Tower and input the code just as the bear prepares to pulverize Ulrich. Yumi runs in and hugs Ulrich, thankful for his safety, and they both blush as a return to the past envelops everything.
Back in time, Milly asks Ulrich to the dance and this time he agrees, while Yumi decides to go with Odd. Sissi, outraged, screams at him, and he then tells him if she gets smarter soon, he'll go out with her too. As Sissi starts walking out, Tamiya records her angry expression, saying it's a super scoop.
- The original French name of this episode is the same as the English.
- The activated tower's red aura is particularly faint in this episode.
- The loading time for Odd to get into Lyoko is only a bit less than a second. In later episodes, it is 2–3 seconds.
- Odd says "Impact" after defeating the Megatank. After this episode, this line would be used exclusively by Ulrich.
- When Ulrich and Yumi run away from the teddy bear, at one point, a car with the Mercedes Benz logo on its tires can be seen on the foreground.
- This episode marks the real first appearance of X.A.N.A.
- This is the first of only two episodes in which Odd was voiced by Christophe Callabero.
- This is the first of four episodes in which Sissi was voiced by Christine Flowers.
- This episode was adapted into book format in The Adventure Begins.
- This episode was included in X.A.N.A. Unleashed.
- On Cartoon Network.com, the name of this episode was Teddygodzilla (possibly mistaken from Code Lyoko: The Adventure Begins with the name error; Teddy-Godzilla).
- In the Code Lyoko: The Adventure Begins novel, both Jeremie and Sissi's names were misspelled as 'Jeremy' and 'Sissy'. Also, when Odd is on Lyoko, he says "Laser Dart" instead of "Laser Arrow".
- When Ulrich rejects Sissi's proposal to go to the dance with him, Milly is missing her leggings/tights.
- When Jeremie is loading Odd's Lyoko ID Card, all of the other cards are all of Odd's instead of Yumi, Ulrich, and Aelita.
- It is very unlikely that Ulrich would have been able to beat the teddy bear to Yumi's house since he was simply following the bear tracks.
- When the Kankrelats are first seen, there are only four of them, but soon after that, all five are seen.