The first two movies were based on the novel by Michael Ende, this one is mainly concerned with the characters.

Bastian dreams of having a sibling, a wish that comes true when his father re-marries, but soon he realises havin a sister is not all it's cracked up to be.

Hiding in the school library, Bastian finds his favorite book, The Neverending Story.

The school bully finds the tome, recognizes the power of the book and begins to form Fantasia with his bad intentions.

Bastian has to get the book back and save Fantasia.