There are 7 dragon balls scattered throughout the world in the game. Once you collect a Dragon Ball, it will be held in your "Key Items Bag" until it is needed later.
Once you collect all 7 Dragon Balls, you can take them to the Old man near Kami's Tower to summon Shenron.
Dragon Ball 1
Dragon Ball 1 can be found in the Harbor below the Red Ribbon Army Base. You'll need SURF to get there.
Dragon Ball 2
Dragon ball 2 is on one of the islands on Route 20.
Dragon Ball 3
3-star Dragon Ball: In Mt. Moon, when you beat the trainer at the end. (before the exit of the cave)
Dragon Ball 4
4-star Dragon Ball: On the Indigo Plateau, just before the center..
Dragon Ball 5
5-star Dragon Ball: In Capsule Corporation, after defeating Pilaf.
Dragon Ball 6
6-star Dragon Ball: On Route 10, hidden near a tree. There is a row of trees, the ball is upwards.
Dragon Ball 7
7-star Dragon Ball: On Route 8, in a corner (to the north), over the rock tunnel.6
Old Man
When you get them all, go to Makyo Town and talk to the old man near the tower so you can summon Shenron.