In this sequel to the NeverEnding Story, Bastian Bux, now a teenager, is having troubles at home: his father Barney's busy workload is keeping him from consoling Bastian's fear of heights, which in turn is hurting his chances of joining the school swim team. As such, he then heads to an old bookstore where he again meets Mr. Coreander, who proceeds to help find a book on courage. While waiting, Bastian re-discovers the Neverending Story's book, and is shocked to see its words disappear off its pages. Deciding to take the book instead, Bastian returns home and finds himself able to claim Auryn right off the book's front cover while hearing the Childlike Empress summon him to Fantasia.Aware of Bastian's arrival and purpose, an evil sorceress named Xayide orders a creation from one of her servants to stop him. The servant creates a memory machine that will strip Bastian of a memory each time he uses Auryn until he is unable to remember where he came from, or why he is in Fantasia. Xayide then sends a bird-like creature named Nimbly to persuade Bastian into making him wish. As the two arrive in a populated area of Fantasia called Silver City, the sorceress sends large monsters referred to as giants to attack. Despite Nimbly's attempts to make him wish them away, Bastian is able to escape from them without doing so. After falling into a secret passage, Bastian is contacted by the Childlike Empress, who tells him of a new threatening force to Fantasia, which is keeping her prisoner in her own castle as well as causing the stories of the ordinary world to disappear, and that he must identify and defeat it.While trying to gather Silver City's inhabitants to help him out, Bastian is reunited with Atreyu, who has heard about what has happened and reveals that the giants come from Horok Castle, "The Seeing Hand". As the two try to figure out how to get there, Nimbly manages to persuade Bastian into making a wish, which he uses to create a vicious, fire breathing dragon. However, it goes out of control and flies off with Atreyu trying to pursue it with his horse, Artax. With the help from Falkor, Bastian is able to chase the dragon to Xayide's castle, where it is destroyed by its defenses. After a brief reunion with Rock Biter, Bastian, and Atreyu, who has caught up, make their way into the castle's entrance with the latter's "army": several wind up toys. Although Bastian gets through, Atreyu is captured. Once getting further into the castle by wishing for climbing steps, Bastian manages to free Atreyu from a giant and the two battle it with the use of a spray can, an item the former had wished for. After the giant falls over and cracks into pieces revealing a hollow shell, Bastian identifies the threat as "The Emptiness", the form of humanity's dying imagination. The two make their way to Xayide in her throne room who admits defeat, stating she had wanted to bring order to dreams and stories, which she consider as forms of chaos. The sorceress is then forced to bring them to the Childlike Empress's castle to free her after Atreyu subtly threatens to kill her.Having noticed his son's disappearance and the Neverending Story's book, Barney takes the latter to Mr. Coreander's bookstore to ask him of Bastian's whereabouts. The owner simply tells him that he will find the answers inside the book, much to Barney's confusion. Returning later with a police officer, he is shocked to see the bookstore abandoned as a result of the Emptiness. Eventually, Barney reads the book and is surprised to see his son's exploits in Fantasia being