Breeding
To breed Pokemon, you have to take two compatible types to a Pokemon Day Care. You need one male and one female, with some exceptions, such as the genderless Ditto. If these Pokemon produce an egg together, the resulting baby Pokemon that eventually hatches is a male or female baby that is the same breed as the mother. In Generation II and III Pokemon games, the baby Pokemon emerges at level five. In Generation IV and V games, it starts at level one.
Moves
In most cases, baby Pokemon are born with a starter move set, regardless what level an individual parent Pokemon has reached and the moves it knows. However, if both parents have learned the same move, either through evolution or TM and HM items, the child can inherit that move. These inherited abilities can become more powerful than Pokemon with comparable levels as the child Pokemon levels up. This helps the child to defeat enemies easier and level up faster itself.
Individual Values
A Pokemon's individual values, such as its hit points, attack, defense and speed levels are determined based on those of the parents. The baby Pokemon randomly takes a total of three of these values from the parents. It's possible to take the same stat from each parent, in which case the parent with the stronger level overwrites the other, and the baby only inherits two individual values total. As with moves, inherited individual values for a Pokemon born by breeding tend to be higher than with wild Pokemon at the same level of evolution.
Breeding Chances
The man at the day care where you breed Pokemon will indicate the chances your two Pokemon have of breeding. If he says the Pokemon get along very well, they have a 70 percent chance of breeding. If they seem to get along, they have a 50 percent chance. If they don't seem to like each other, they have a 20 percent chance. If they prefer other Pokemon, they have a zero percent chance. Not every Pokemon breed can mate with another, regardless of its level or abilities. For example, the couple cannot breed if either or both are legendary Pokemon.