Twelve-year-old Bastian Balthazar Bux had lost the wonderful imagination he had as a child somewhere between growing older, watching TV, going to school and playing with his Gameboy. But when his mother dies suddenly, Bastian's limitless imagination is reborn. Bastian comes across a magical book, "The Neverending Story," in a curious little bookstore.
Bastian's dad decides to put their house up for sale, because there are to many memories to his late wife in the house. Atreyu meets the wizard, Curiosity, who teaches him how to read. Fly Girl flys Atreyu back to the Ivory Tower and Bastian finds out he has to give the Childlike Empress a new name.
Bastian's Mother is in a car accident. Bastian then meets Mr. Coreander, the owner of an old book store. Mr. C gives Bastian a book called The Neverending Story in exchange for a broken video game. Bastian's mother tells him that the book will guide him. Later, he wakes up and his mom is gone. He attends her funeral and has a hard time coping with her death. He begins reading TNES and becomes involved with the characters and events that occur in a mystical land known as Fantasia. He discovers that the land is in grave danger and his being ripped to shreds by dark force known only as ""The Nothing"". The Childlike Empress of Fantasia chooses a young warrior known as Atreyu(son of all) to combat the nothing to and to find a cure for her illness which seems to coincide with the poisoning of the land.
Bastian is so caught up with the book that he neglects his school work and his chores around the house. In Fantasia, Atreyu meets Fly Girl and finds out the luckdragon is a flying machine flown by Fly Girl.
When Bastian learns that nothing in Fantasia can exist without a name, he enlists Marley and Lucas to help him get rid of Mr. Blank by deleting all references to him in the school. Meanwhile, Atreyu joins up with Fly Girl and heads to the Southern Oracle
Bastian wants to earn money so he can buy his dad a present for his birthday , he gets a job at the bookstore where he got the book The Neverending Story in Mr. Coreander's shop. In Fantasia, Atreyu goes to find the riddle gate.
Bastian finds a letter from his mother ,that she wrote to him before she died. He believes that it is a message from beyond. Moonchild (The Childlike Empress) goes on a tour of Fantasia while Atreyu and Fly Girl go to the Dark City to save the luckdragon.
Connor, a bully in Bastian's class challenges Bastian to a fight and bastian decides to accept the challenge. Moonchild sends Fly Girl on a solo mission and takes back the aurin from Atreyu and gives him a rusty old sword which if he says the name of it, it'll become of use to him. Atreyu meets with the woodlanders and 3 fallen heroes.
Because of the fight between Bastian and Connor both are put on detention for a week. During the week, Miss Vinagan tells them to write a compostion on any subject so Bastian decides to write about the book but when bastian and Connor re-write the story, the events change in Fantasia to what they write. In Fantasia, the 3 heroes lock up Atreyu and Tartis but they eventually get out and Atreyu battles Xayide's knights.
The school dance is approaching and Bastian wants to take Marley but things don't go the way Bastian wants.Bastian and Lucas have to take Gemma, the daughter of the real estate agent that is trying to sell Bastian's house.
Gemma turns about to be a girl from Fantasia that works for Xayide, she transfers to bastians school in order to steal the book from Bastian which she does. In Fantasia, Moonchild gives Atreyu back the aurin and Curiosity/Mr. Coreander and Fly Girl prepare Atreyu to go into the real world to protect Bastian from Gmork who got turned back into a wolf.
No one in Fantasia is meant to read the book or they'll grow older as they read it and eventually turn to dust. Xayide now has the book and decides to read the book. April tells Gemma to go to Moonchild to tell her Xayide got the book. In the real world Gemma comes back and returns the book to Bastian. Bastian and Fallon read the rest of the book but Fallon asks Bastian to go back to a part where Xayide was still alive which means he turned back time in Fantasia bringing back Xayide. While they read the book, Fallon said she liked the part about Xayide then Bastian sees her eyes turn yellow.