After losing Zane, the Ninjas have gone their separate ways, with only Lloyd seeking to reunite them. Shortly after coming together at Lloyd's behest, they receive a message that Zane is alive and must compete in Master Chen's Tournament of Elements if they wish to see him again. Sensei Garmadon, who knows Chen personally, is suspicious and accompanies the ninja team on their journey to Chen's island. While on the ship, the ninja team discovers that the ninjas aren't the only elemental masters, as there are other descendants of elemental powers like speed, metal, smoke, nature, gravity, mind, light, etc.
Since last seen, Zane has rebuilt himself out of titanium but has lost his memory. He finds P.I.X.A.L. in another room, her body scrapped and her consciousness trapped in a computer. The meeting with P.I.X.A.L. triggers his memories, and he uploads her on his hard drive before Clouse catches and tasers him. As the tournament continues, Master of Speed defeats Master of Gravity, Master of Mind defeats Master of Nature, and Kai defeats Master of Smoke, each obtaining a Jade Blade and moving on. The ninja team tries to get help from Neuro, the master of Mind, who fails to break into Chen's quarters but learns that Chen's planning to steal everyone's powers for a spell. When Cole and Jay are pitted against each other, Cole forfeits and gives up the Jade Blade to Jay.
After Jacob, the Master of Sound, loses to Skylor, he is brought to Chen's underground factory, just like everyone else who was eliminated, where he attempts to escape. Clouse catches Jacob and makes an example of Jacob, by dragging him off to "feed" Clouse's pet, the second-largest snake in Ninjago. Cole, now powerless, finds Zane locked up and promises to get them both out. In the meantime, Nya uses her new vehicle to locate Chen's island to find the ninja, but Dareth ends up coming along. The elemental masters are given roller skates in an event called Thunderblade where Lloyd and Camille, Master of Form, must complete as many laps as possible while carrying a Jade Blade, with the remaining elemental masters racing along to help them or slow them down. The ninja team spreads the news about Chen's plans among the other elemental masters, who choose to help Lloyd and overwhelm Camille. Camille crosses the finish line before Lloyd but ends up dropping her Jade Blade, leading to Lloyd's victory. The ninja team earns the trust of several other contestants.
The Ninja team forms an alliance with the Elemental Masters after convincing them of Chen's plan. Chen insists that the collected elemental powers will be bestowed on the winner of the tournament. He also reveals that he has a spy among the Elemental Masters, who begin to distrust each other, weakening the alliance. Nya enters Chen's palace, disguised as one of his attendants, and steals page 149 from Clouse's spell book, which is revealed to turn Chen's followers into Anacondrai.
Chen discovers that Nya is on the island, and in possession of the stolen spell. He tells the fighters that whoever finds her, wins the tournament altogether. Lloyd learns how to create a dragon without his Golden Power and, along with his father, stumbles upon the place where a great battle between the Elemental Masters and the Anacondrai took place. Garmadon reveals that it was Master Chen, who convinced both sides to declare war. In the war's aftermath, the Anacondrai Generals were banished to the Cursed Realm while the remaining Serpentine were locked in tombs. While the Elemental Masters are out in the jungle, Chen captures all of them, save for Lloyd, who did not take any of the "gifts" that would allow Chen to track him. Skylor is revealed to be Chen's spy and daughter.
Chen steals the powers of all Elemental Masters and only needs Lloyd's power to complete the spell. Meanwhile, Cole, Zane, and Karlof lead the imprisoned Elemental Masters in escaping the factory, using a makeshift Roto Jet. Chen has Kai betray Lloyd and trick him into battling Chen, who uses all the other Elemental Powers against Lloyd, defeating the Green Ninja and stealing his powers. However, Kai and Skylor take Chen's staff and destroy it, restoring the powers of all Elemental Masters.
Clouse believes that Skylor's power of Amber, which can absorb and copy elemental powers, can still be used for the spell. Kai manages to find Skylor and tries to help her escape, but they get captured. Clouse battles Garmadon and tries to banish him to the Cursed Realm, but Garmadon escapes and Clouse gets banished instead. Chen manages to complete Clouse's spell without him, turning himself, his followers, and everyone who has the Anacondrai symbol on their back (including Skylor and Garmadon) into Anacondrai. While he and his army fly back to Ninjago, Kai and Skylor escape. The Elemental Masters learn from Zane that they have the power to create their own dragon and follow Chen and his army. Jacob is revealed to be alive, having been tasked with feeding the serpent, rather than being fed to it.
The spell that turned Chen and his followers into Anacondrai begins to wear off, and Chen requires the essence of a true Anacondrai to make it permanent. His forces break into Cryptarium prison, where the Ninja are visiting the shrunken Pythor. Chen extracts Pythor's essence, completing the transformation, and seemingly loads his army on noodle trucks to dispatch them to various locations. The Elemental Masters intercept them, realizing too late that they have fallen for a diversion as the bulk of Chen's Anacondrai warriors are attacking Ninjago City.
The combined forces of the Elemental Masters and the Serpentine make their final stand at the Corridor of Elders against Chen's Anacondrai army. Pythor escapes and convinces Garmadon to release the Anacondrai generals, Hoping they would help defeat Chen since he made a mockery of their tribe. The spell however requires somebody else to be banished as well. Garmadon sacrifices himself, feeling he must make amends for wronging his own family back when he was under Chen's tutelage, and releases the Anacondrai spirits. Chen and his army are spirited away into the cursed realm, and Garmadon is banished along with them. The Ninja team burn the Spellbook and build a memorial to Garmadon in the Corridor of Elders. A ghost is shown having escaped the Cursed Realm, Morro.