As the battles escalates , Iroh watches Zhao slay the moon spirit Tui , causing the Waterbenders to lose all of their powers and abilities to Waterbend . As the battle escalates , Iroh watches Zhao capture the moon spirit Tui , which with its water spirit counterpart had assumed the form of a fish . Despite Iroh 's pleas , Zhao kills Tui to strip the Waterbenders of their powers and abilities to Waterbend .