Cody accompanies Alex on a vacation to Hawaii where she wants to spend time with her autistic 10-year-old nephew, Timmy, and to show him to swim with dolphins in the local lagoon, which the mute Timmy is afraid to do so.

A mysterious figure called "The Phantom Lifeguard," begins making rescues and disappears before being identified by anyone. While Mitch thinks the Phantom Lifeguard is an outsider, Cody and J.D. think the unseen hero of the day is getting his/her information from inside the department.

Cody puts his career (and life) on the line when he starts using a performance-enhancing supplement in hopes of making it to the 2000 Sydney Olympics, which soon begins affecting his life guarding job as well.

Craig tells Mitch a shocking secret that he has lymphoma when they become caught up in a high-risk adventure at sea starting when they get lost in a fog while paddle boarding and then get attacked by a shark. They manage to reach land only to end up as prisoners on a top secret military test range. Back at Baywatch, April cannot find the right time to tell Manny about her involvement with Craig.