It's been a week since the newly-styled Emperor Garmadon seized control of Ninjago City. Amidst the chaotic, tyrannical regime, an underground resistance begins to form, led by Nya and Lloyd. Meanwhile, in the First Realm, the other ninjas with Kid Wu find themselves shipwrecked. Attempting to ensure their survival, they soon discover that they are not alone in the realm.
The mysterious tribe which captured Kai, Jay, and Zane, named the Dragon Hunters, takes them to their leader, the Iron Baron, who seems convinced that the Ninjas are Oni and killed the Ultra Dragon. They are escorted to a perilous arena and made to battle a dragon. In a bid to help their friends, Cole and Wu go undercover as Dragon Hunters. In Ninjago, Garmadon destroys Mr. E for failing to capture Lloyd, while the elemental masters, along with Mistaké, reveal to Lloyd that his friends are in the Realm of Oni and Dragons and join the Resistance, and seek to inspire Lloyd to regain his power and next is his Golden Power.
Mistaké challenges Lloyd to find his voice, convincing him to broadcast a message to inspire the people. In the First Realm, Kai, Jay, and Zane have been captured and imprisoned in the Dieselnaut and are to be used as bait for that night's dragon hunt. Cole and Wu, still disguised, join the hunt and learn about the Firstbourne Dragon, the leader, mother, and queen of all dragons, who wield all the elements. Meeting with the imprisoned Ninja, Cole assures them that they will find a way out of their predicament, "for us, and the dragons".
The Ninjas are taken to the Dragon Hunter's village. Planning to escape, they resolve to build a simulated Firstbourne with Cole and Wu. Back in Ninjago, The resistance, led by a newly motivated Lloyd devise tactics for overthrowing Garmadon. Dareth, feeling excluded due to his lack of elemental power, convinces Mistaké to help him help obtain 'brown power'.
Harumi leads an attack on the secret headquarters of the resistance. Now sundered, and living in the slums, those remaining discover a secret about Mistaké. In the Realm of Oni and Dragons, The Ninjas, now free from the hunters, wake to find now a teenager Wu remembering more about his past. Finding an unlikely ally in Heavy Metal, the Iron Baron's second-in-command, who reveals himself to be a woman named Faith, Wu leads the group to look for the legendary Dragon Armour, which would help them control the Firstbourne Dragon, to save the Realm and return to Ninjago.
Mistaké reveals her true origins to the Resistance and teaches Lloyd that he must transform one final time into the great leader he is destined to become. Meanwhile, Emperor Garmadon embraces Harumi as his daughter of darkness and sends her to capture Lloyd, but she ends up being captured herself. In the Realm of the Oni and the Dragons, continuing their journey with Faith through the desert, the team venture into Oni territory, where they discover that all the Oni are long gone, as well as a map showing the Dragon Armor to be inside Firstbourne's nest.
Faith teaches the Ninjas to use vengestone harpoons and Wu to ride a dragon, but when they are found by the Dragon Hunters who capture Faith, Wu and the Ninja are forced to continue their journey alone. Meanwhile, in Ninjago, the Resistance keeps Harumi hostage at their hideout, and come up with a plan to have Mystaké disguised as her and Skylor as a prisoner go to Garmadon's base so that Skylor could borrow his powers and thus be able to control Colossus. However, things don't go as well as planned when Harumi escapes and goes to warn Garmadon.
After trying to rescue Faith, the Ninjas and Wu get captured. Faith reveals the Iron Baron's lies to the other Dragon Hunters, while Wu ages up to a young adult and regains all his memories. He makes a deal with Iron Baron who, in exchange for the Dragon Armor, promises to send the Ninja back home. In Ninjago, after being discovered, Mistaké reveals her true Oni nature to Garmadon and confronts him, allowing Skylor to borrow his powers and escape, while she is presumably killed. Skylor struggles with Garmadon over the control of Colossus, but she ends up "poisoned" and Colossus accidentally destroys a building full of people. Harumi goes inside and rescues a family, but the building collapses and she dies, or so everyone thought. This angers Garmadon, who swears to destroy Lloyd and the entire Ninjago City.
After Harumi's death, Garmadon angrily begins destroying the entire Ninjago City with Colossus, while Lloyd and the others head to a more remote side of the city, waiting for Wu and the other Ninja to return. They run into Ultra Violet, whom Nya has a fight with and gets injured, but they manage to defeat her and continue their path. In the Realm of Oni and Dragons, the Dragon Hunters release the Ninja and Faith after realizing that Iron Baron showed his true colors and cares only about himself. Meanwhile, Wu takes Iron Baron to the Firstbourne Dragon's nest, where he dons the Dragon Armor. However, the Firstbourne senses the evil in him and attacks, trapping him in molten rock and leaving him to die. Wu then finds the Armor and becomes the Golden Dragon Master, riding the Firstbourne back to the Ninja and the Dragon Hunters. Faith decides to remain here to lead the Hunters and try making the Realm a better place, while Wu and the Ninja ride each a dragon back home to Ninjago.
Wu and the four Ninjas are finally back home and reunite with their friends. Nya and Dareth take Skylor to safety, while Kai, Jay, Zane, and Cole rescue the civilians and fight Colossus, and Lloyd and Wu confront Garmadon. The Elemental Masters and the Ninja's other allies escape from Kryptarium prison and help the Ninja defeat Colossus, while Garmadon defeats Wu and the Firstbourne Dragon, leaving only Lloyd to fight him. After understanding that fighting is what gives Garmadon his powers, Lloyd stops fighting him and just "resists him" instead, by using the Art of the Silent Fist, which causes Garmadon to slowly lose all his powers and Lloyd to restore his next is his Golden Power. However, although Garmadon is finally defeated, he warns Lloyd that his powers were the only thing strong enough to prevent some dark forces from attacking Ninjago, and now that they're gone, "they" will come and destroy everything. In the aftermath of the battle, Colossus gets destroyed and all the Sons of Garmadon, including Garmadon, are arrested; Skylor gets back to normal health and wakes up tended by Kai and after her health is restored; and the people of Ninjago celebrate the Ninja and their allies. Sometime later, Lloyd meets with Wu, now back to his normal age, who tells him that the Firstbourne and the other dragons have to return to The First Realm, and will return only when they'll be needed again. Lloyd then tells Wu about his father's warnings and, after learning that all the Oni are gone from The First Realm, concludes that "they" means the Oni, and that "they" are coming.