If a Pokémon with Water Bubble is attacked by a Fire-type move, the opponent's Attack or Special Attack is reduced by 50% during damage calculation, effectively halving the damage the Pokémon takes. When a Pokémon with this Ability uses a Water-type move, its Attack or Special Attack doubles.
It also prevents the Pokémon with the Ability from being burned. A Pokémon with Water Bubble will be cured of burn if it is burned while in battle (such as if it gains the Ability by an effect like Skill Swap, or is burned by a Pokémon with an Ability like Mold Breaker).