A long time ago, the year 1811 to be exact, the Brothers Grimm were taken prisoner by General Jacques du Marquis, an officer in the French army. He had determined that the stories the brothers wrote were about a real place, and he intended to conquer it for Napoleon. General Marquis had also found Mother Goose and locked her in a cage. When Mother Goose woke up, the brothers told her what had happened. She disappeared in a flash of light. General Marquis threatened the lives of the Grimm family if the brothers refused to help him find a portal to the Land of Stories within two months.
The story returns to the present where Conner Bailey, now 13, is packing for a trip to Germany with his school to hear three recently uncovered stories written by the Brothers Grimm. He uses the magic mirror his grandmother, the legendary Fairy Godmother, gave him to contact his sister, Alex. She is in the Land of Stories studying to be a fairy godmother. In fact, she is preparing for the Inaugural Ball, which will celebrate her joining the Fairy Council. Alex suggests Conner break off a small piece of the mirror so that he may take it with him to Germany. That way, they can stay in contact with each other.
Alex spends the first part of every morning trying to grant three wishes for random people in the Land of Stories. Her obese unicorn, Cornelius, uses his magic horn to find those who need her help. Although Alex means well, she often makes mistakes, such as when she tried to fill a dry well so a town would not be thirsty and winds up flooding the town instead. A farmer insists she not use magic to build a needed fence. Annoyed at his lack of trust in her abilities, Alex builds the fence by hand. Her efforts catch the eye of the farmer’s handsome son, Rook.
Conner’s stepfather takes him to the airport to meet his teacher and classmates. He does not care for most of the girls going on the trip, because they are rude to him, but he has a crush on Bree, who ends up sitting next to him on the plane. Bree loves reading and is especially fond of mysteries. She asks about Alex and does not believe Conner’s story that his sister is in Vermont.
Alex’s grandmother advises her to take some time off from her magic lessons, so she accepts Rook’s invitation to go for a walk with him the following evening. She also attends the wedding of her friends Jack and Goldilocks. Queen Red Riding Hood attends as well and gives Alex confusing advice about Rook. Alex agrees to visit Red’s kingdom the following day as a way to get her mind off her upcoming date.
In Germany, Conner attends the reading of the new stories by the Brothers Grimm. He is shocked when the first two stories are actually ones that he wrote the previous year. Bree questions him because she also read his stories, but Conner claims it is just a coincidence.
The third story tells of an invading army trapped within a fairy in a portal for 200 years. However, when the 200 years have passed, they will find their way to the Land of Stories and wage war against it. Conner knows this message was meant to warn him, and he must find a way to get a message to his sister. He fakes illness and returns to his hotel room to try to summon Alex with the magic mirror.
Alex attends a special meeting of Red’s government, only to witness Little Bo Peep demand an election to decide if she should lead the kingdom instead of Red. Later, Alex shares this news with Rook. He suggests they do some investigating to discover why Bo has suddenly challenged Red. They see the shepherdess talking to a man in her own magic mirror, promising to help him.
Alex and Rook nearly share a kiss before he leaves her for the night. The following day, Alex prepares for the Inaugural Ball. She discovers that during her training, she has been tested to see if she had the qualities to be a fairy. Without knowing it, she passed the tests for courage, grace and kindness. Now she must explain why she wants to join the Fairy Council so she can pass the test of heart.
She explains that she knows what it is like to live without magic, and so she has empathy for those in the land without it. She feels she can be a fairy for the common people. The Fairy Godmother declares Alex has passed her test. Alex is surprised to see Rook eavesdropping on the ball. He explains that he wanted to see her, but had not realized the ball was explicitly for her. Now that he knows the truth, he likes her even more. They share a kiss.
The Fairy Godmother confides to Mother Goose, now that Alex has been chosen to be her successor, that the Fairy Godmother is losing her power. Some of her enchantments are starting to dissolve. It also means the Fairy Godmother is going to die. Mother Goose leaves the ball to try and contact Conner. He is in the bathroom of the airport when Mother Goose opens the mirror. He tells her about the Grimm Brothers’ warning, and she tells him about General Marquis. She had enchanted the portal that the French army went through so it would take 200 years to make the journey. When the Fairy Godmother closed all the portals after the Enchantress was defeated, Mother Goose thought the army would never get through, and she would not have to tell anyone. But now that the Fairy Godmother’s magic is failing, Mother Goose is afraid the portal may again be open.
She sends Conner on a hunt to find it. Conner tries to slip away from the airport, but Bree has been spying on him. She insists on helping him, and the two travel to London and Monte Carlo for clues before heading back to Germany to the famous Neuschwanstein Castle where the portal is hidden. Ten-year-old Emmerich offers to help them get into the castle after it closes. There, they discover the open portal and all three are transported to the Land of Stories.
Alex has spent the time since the ball helping Red Riding Hood recover from the loss of her throne to Little Bo Peep. She also spends time with Rook. Red’s boyfriend, Prince -aka Froggy, finds himself transformed back into a frog as the Fairy Godmother grows weaker. Alex learns the sad fact that, because she has been chosen to inherit the title, her grandmother is dying.
Conner, Bree and Emmerich arrive in the Land of Stories at the same time as General Marquis and his army. They race to find Alex. She calls a meeting of all the nobles of the Kingdoms and has them organize their armies. She then creates a magic path, which will keep them hidden from the French. As the portal to return home does not work for Emmerich and Bree, they are sent with the nobles in order to keep them safe. Jack and Goldilocks accompany the group to act as their bodyguards.
General Marquis releases prisoners who wish to help him fight for control of the land. A Masked Man offers him the only way to assure victory. He leads General Marquis to the Snow Queen. There General Marquis promises to give her back her Kingdom in exchange for her dragon egg. The Masked Man claims that a dragon is the only beast capable of defeating the fairies.
Conner and Alex travel to the Trolls and get their army to help in the coming war. Meanwhile, the nobles are traveling on the enchanted path when Sleeping Beauty spies her kingdom in ruins. She forces the carriages to stop so she can survey the damage and hears the cry of a baby. She rescues a little girl from the wreckage and vows to adopt her.
Alex and Conner visit the Elf Kingdom to gain their support. Alex promises their queen that she will share management of a new assembly of kingdoms once the war has been won, and the queen agrees to help them. Unfortunately, the French begin their attack before the Elves can be brought to defend the Fairy Kingdom. Alex and Conner escape, but they are severely wounded when a cannonball knocks them from the sky.
A kind witch helps them recover. They discover that the man in Bo’s mirror was the Masked Man from prison. The witch tells them the man was evil and once tried to steal something from the Fairy Godmother.
Alex and Conner combine their magical abilities and are able to gather all the hidden armies and get them to the Fairy Kingdom just as General Marquis arrives. He threatens to burn the nobles, whom he has captured with the help of Rook, if the fairies do not surrender. The fairies help the nobles escape, and they join in the battle.
General Marquis calls forth the Masked Man who releases the dragon. The man uses the dragon to kill General Marquis. Bo tries to reason with him, but he turns the dragon on them all. The Fairy Godmother regains her strength long enough to defeat the dragon, after which, her body dissolves into hundreds of lights that float up to the sky.
Bree and Emmerich are sent home. Alex confronts Rook about his betrayal, and although he did it to save his father and other villagers, she cannot forgive him.
As her first act as Fairy Godmother, she creates the Happily Forever After Assembly, which allows the trolls and elves equal voice with humans and fairies in the running of the Land of Stories. As Alex retires in her room, she is shocked to discover the Masked Man stealing a vial. She takes off his mask and is horrified to see the evil thief is her father.