PokéBase - Pokémon Q&A
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I was wondering if the ability "pickpocket" works in PVP Battles. Like, will it still steal the opponents held item and if it does will it keep the held item?

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The item is restored to its original holder after the battle, but during the battle, yes, it is actually stolen.

Some battles, most notably link battles or battles in certain battle facilities, will not affect the participating Pokémon's experience, EVs, or friendship. The battle's outcome will not cause money to be awarded to or deducted from participating trainers. Pokémon seen during these battles will not be registered in the Pokédex. Usually, bag items are not allowed in these battles, and all Pokémon and held items are restored after each battle.

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Useless fact: I wrote that paragraph in 2017.
Very cool.