structural:expansion
2001–2006: End of the craze, business reforms

In North America, Pokémania peaked in 1999, slowing down throughout the next year. On April 29, 2000, the anime was bumped off Kids' WB 's #1 spot after holding it for 54 weeks. Around the same time, Pokémon was surpassed at Fox Kids by its rival Digimon. In Europe, the craze peaked in 2000. On January 20, 2001, The New York Times reported that Pokémon ' s trading card market had collapsed in the US. A June 2001 survey in the United Kingdom confirmed that Pokémon ' s popularity was waning there. Tobin (2004) wrote: "By the summer of 2001, Pokémon's shelf space in Japanese and U.S. toy stores was but a fraction of what it enjoyed in the fall of 1999". By the end of 2001, Pokémania was fading globally, and by 2002, the fad was largely over.

From 2000 to 2002, Game Freak developed Pokémon Ruby and Sapphire, the successors to Gold and Silver, for the newly released Game Boy Advance. Masuda, who was appointed to assistant director during Gold and Silver, was promoted to director for Ruby and Sapphire, with Tajiri making himself executive director. Masuda was concerned that the end of Pokémania indicated the end of Pokémon as a whole: "After Gold and Silver came out, it was a huge hit around the world, but shortly after everyone was saying, 'That's it. The Pokémon fad is over! It's dead!'." Determined to keep the franchise going, GF not only wanted to "prove people wrong" with Ruby and Sapphire, but already started planning their sequels: Diamond and Pearl (2006). They also began planning remakes of older installments, starting with FireRed and LeafGreen (2004), remakes of the original Red and Green.

Ruby and Sapphire were released in Japan on November 21, 2002, and in the rest of the world the next year. The games introduced 135 new Pokémon, bringing the total amount to 386. Because of this, Golin Harris, NoA's ad agency, advised them to move away from the "Gotta catch 'em all!" slogan. They reasoned that if new, younger players were drawn into the franchise with Ruby/Sapphire, they would find the concept of "catching them all" to be a daunting if not impossible task if they didn't also have Red/Blue/Yellow and Gold/Silver/Crystal. Dockery (2022) noted that "from both a marketing perspective and, really, a legal perspective, it would not be to the company's advantage to keep pushing that slogan".

By 2002, the relationship between Pokémon USA (PUSA) and Wizards of the Coast had deteriorated. That year, at least seven high-profile employees were poached from Wizards by PUSA: Wizard's former art director, senior graphic designer, business manager, events marketing director, project management director, and two vice presidents. All employees had signed NDAs. In March 2003, PUSA told Wizards that their contract would not be renewed, and that Wizards would not be distributing the new Ruby & Sapphire card set. Later, Wizards was also prohibited from releasing the sets Jamboree and Legendary Collection II. Notably, Jamboree was the first set containing cards designed by Wizards themselves. As considerable time and money was invested into creating them, Wizards was upset when they were barred from putting them out. On October 1, 2003, the day after their agreement expired, Wizards filed suit against Pokémon USA, alleging that the defendant had seized their intellectual property and trade secrets, and illegally tried to gain advantage over them in the competitive trading card market. The case was settled out of court. Jamboree and Legendary Collection II have remained unreleased.

In October 2001, 4Kids Entertainment signed a new contract with PUSA, continuing to serve as Pokémon ' s exclusive licensing agent and anime localizer. On December 23, 2005, it was announced that the agreement would not be renewed and would expire on December 31, with PUSA moving all licensing in-house. The localization of the anime would be done by PUSA in cooperation with TAJ Productions. PUSA proceeded to replace almost all of the original English voice actors, who were still under contract with 4Kids. This decision "raised the ire of fans and the actors themselves". According to Stuart Zagnit, who voiced Professor Oak, the recasting was done to cut back on costs.

In March 2003, Pokémon UK was established in London as a British representative of The Pokémon Company.