After Bastian's mother Laura is mortally injured in a car accident, Bastian finds a magical book called "The Neverending Story" and starts to read it. In the book, a young warrior named Atreyu is tasked to save the world of Fantasia. Atreyu sees The Childlike Empress, who tells him about The Nothing and her sister, the Dark Princess.

Bastian's substitute teacher L.C. Blank replaces the homeroom teacher Mrs. Finnegan, and Bastian recognizes him as a man who had sat next to him on a park bench and noticed the book. Bastian turns in his assignment, but Mr. Blank says he never got it, and makes Bastian do it again during the lunch break. The next day, he hides from Mr. Blank in the attic and continues reading. In the story, Atreyu begins his quest, aided by his best friend, and has to deal with Xayide enslaving his entire woodland village.

Bastian reaches a part of the story that he cannot bring himself to read, but Coreander encourages him to do so. Mr. Blank accuses Bastian of plagiarizing Oliver Twist word-for-word, even though Bastian protests that his report was on the Journey to the Center of the Earth. Bastian and his friends soon discover Bastian's actual report, and conclude that Mr. Blank forged his report. In the story, Atreyu decides to search for the Luckdragon, and Artax loses his life in the City of Old Emperors. When he finds the Luckdragon, he finds that it is a contraption being flown by Fly Girl, who is on a quest of her own.

After Bastian hands in a rough draft of his original report to prove to Mr. Blank he is not a plagiarist, Mr. Blank gives him a second failing grade just because. Having had enough, Bastian rallies together Marley and Lucas to help him erase every record of Mr. Blank from the school. In the story, Atreyu pilots Fly Girl's ship towards Dark City.

Bastian earns the money to buy his father's birthday gift.

Michael puts the house up for sale after Bastian sees his mother's ghost.

Atreyu and Fly Girl attempt to save a luckdragon with the help of a magic sceptre.

Bastian is worried about a girl in his class who seems to be struggling.

Bastian deals with a bully who challenges him to a fight.

Bastian and Connor get into trouble for fighting.

Atreyu and Fly Girl must save the luckdragon from the dungeons of Dark City.

Atreyu visits the real world but arrives too late to keep Gemma from stealing "The Neverending Story".

After Gemma goes missing after stealing the Neverending Story, the city puts out a 'missing child alert' for her, while Fallon is continuously drawn towards the book, particularly about Xayide. In the story, Gemma has second thoughts about stealing the book, and is pursued by Xayide's forces. Xayide reads the book, but because no Fantasian is allowed to read it, she gradually ages to death, to the grief of her sister, the Childlike Empress. By the end, Fallon enters the book and brings Xayide back to life.