Bastian's wish for a sibling comes true when his father remarries, but he's soon having trouble with new stepsister Nicole and with a gang of school bullies, The Nasties. Hiding in the school library, Bastian finds his favorite book, THE NEVERENDING STORY. Later it's found by the gang's leader Slip, who recognizes the book's power and starts to form Fantasia after his bad intentions. When the chaos worsens, the Child-like Empress requests Bastian to move back to the real world, get the book back, and save Fantasia. Some Fantasia characters accidentally travel with him into reality and get lost in different places. Meanwhile, Slip and the other Nasties spread anarchy. Finally, Bastian gets support from Nicole, who begins to believe in the power of Fantasia.