Trama

A young boy must restore order when a group of bullies steal the magical book that acts as a portal between Earth and the imaginary world of Fantasia.

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.—Tom Pfeifer <pfeifer@fokus.gmd.de>

In a prologue, the Old Man of Wandering Mountain (Freddie Jones) reads from a large book, begins to record a prophecy of a day when "The Nasty" will arrive in Fantasia, and describes the savior of "Extraordinary Courage".

Bastian Balthazar Bux (Jason James Richter) has grown older, and his father Barney (Kevin McNulty) has married a woman named Jane (Tracey Ellis), whose daughter Nicole (Melody Kay) is displeased at having a new family. Bastian has also started high school, where he has become a victim of the Nasties, a quintet of bullies led by Slip (Jack Black). Bastian arranges for them to be expelled with the help of the janitor (Mark Acheson) after the Nasties trap him in the boiler room.

He later flees to the library, where he is surprised to find Mr. Koreander (Freddie Jones) and the Neverending Story. The Nasties locate him, but he uses the book to escape to Fantasia, where he is reunited with Falkor (William Hootkins), Engywook (Tony Robinson), and Urgl (Moya Brady).

On Earth, the Nasties find the Neverending Story and use it to bombard Fantasia with fireballs and a storm. With a walking tree named Bark Troll (William Hootkins), Bastian and his friends head for the Wandering Mountains to speak with the Childlike Empress (Julie Cox), who asks Bastian to find the Neverending Story using the AURYN. Falkor, Barky, the gnomes, and Rock Biter's son, Junior, help him, but a "wish overload" scatters across Earth, where Barky ends up in a conifer forest, Falkor saves Junior from falling to his death near Mount Rushmore, and the gnomes arrive in Nome, Alaska. Bastian locates Falkor and Junior, and Falkor flies off to find the others while Junior stays at Bastian's house. Rock Biter sadly informs his wife that Junior is gone, and the Nasties provoke them to quarrel.

Nicole takes the AURYN from Bastian's room, discovers its wishing abilities, and takes it on a shopping trip to the local mall. Bark Troll arrives at Bastian's house disguised as a garden plant, while the Gnomes are mailed to him in a box. The reunited group go in search of Nicole, but the Nasties find the AURYN first, whereupon giant crustacean creatures appear in Fantasia to kill the Empress and her advisers. Everyone in the mall turns evil, including Mr. Koreander and Bastian's parents. Bastian is struck by lightning, and begins to succumb to the wills of the Nasties, but Nicole saves him, and Bastian recovers the AURYN and the book in a fight.

The Fantasians return to Fantasia, which is restored to its former magnificence. Bastian and Nicole manage to keep their parents from divorcing, and Junior is reunited with his parents. Nicole and Bastian return to school the next day and find that Bastian has changed Slip and the Nasties into friendly classmates, and Bastian returns the Neverending Story to Mr. Koreander.