The ninjas are invited to the birthday of Princess Vania of the fabled Kingdom of Shintaro and set sail for Shintaro but are attacked by a pack of Dire Bats, vicious aerial predators who roam the mountains around Shintaro. They are rescued by a regiment of the Winged Guards of Shintaro, led by the brave Hailmar.
The ninjas are welcomed to Shintaro by King Vangelis and Princess Vania. That night, Cole is accosted by a Geckle named Gleck who is wearing a necklace that belonged to his mother. No one believes him except Princess Vania who leads Cole to a mountain tunnel and they stumble upon an underground mining operation where Geckles and Munce are being forced to dig by an army of Skeleton Warriors, controlled by the vicious Skull Sorcerer.
Cole got caught and now is a prisoner of the Skull Sorcerer while Princess Vania races back to the surface where she tells the ninja and her father what she saw below. The ninjas quickly gather their things and race to Cole's rescue. Deep underground, Cole toils in darkness alongside the Geckles and Munce, whom he discovers are bitter rivals over a past grievance that each side blames upon the other.
The ninjas learn that the Geckles' and Munce's mutual hatred stems from the fact that each group thinks the other stole a pair of swords called the Blades of Deliverance, which were given to them by a hero who came to their mountain many years earlier. The hero, whom the Geckles call "Gilly," whose real name is Lilly, saved them from a dragon named Grief-Bringer and gave them the swords as a farewell gift.
Having become separated from the others, Nya, Jay, and Lloyd are led back to the Munce "Home Cave" by a Munce named Murt. There, they are introduced to the Munce Queen, Murtessa, who immediately falls for Jay, whom she considers a powerful warrior. Realizing that Nya and Jay are engaged, the queen turns on Nya and challenges her to combat to determine which of them shall be with Jay.
Kai and Zane stumble into a party of Geckles who think they may be working for the Skull Sorcerer. They are arrested and brought back to the Geckle "Strong Cave," where they meet the Geckle leader, Chancellor Gulch. Gulch decides to put the matter to a "Trial-By-Mino." Kai and Zane are cast into a pit with a raging Mino to determine their innocence or guilt.
Cole runs first into a nest of Dire-Bats, and then into a cave tunnel filled with giant spiders, but Princess Vania and her pet dragon, Chompy, arrive just in time to free Cole and they escape back to the surface where they tell King Vangelis about the evil Skull Sorcerer. In a shocking twist, however, Vangelis reveals that he himself is the Skull Sorcerer. After the Skull Sorcerer sends Cole and Master Wu to the bowels of the mountain, Vania follows them but not before Vangelis disowns her as his daughter.
Princess Vania attempts to catch the falling Master Wu and Cole, but their combined weight tears her wings loose. All 3 friends find themselves plunging into the mountain. As they fall, they encounter various bizarre threats and creatures before they are swept over a waterfall and tumble through a sinkhole to wash up on the shores of a cavern called Rock Bottom, where he meets a group of adventurers down here.
Cole awakens from a dream to find himself surrounded by Lowly, Master Wu, and Princess Vania. The Lowly reveal they were adventurers who, at the request of King Vangelis, went searching for the Skull of Hazza D'ur. They found the skull and delivered it to the King, who - instead of destroying it, as he had promised - betrayed them and cast them into the mountain, taking the skull for himself.
Cole leads the Lowly, Princess Vania, and Wu in a series of fruitless efforts to find a way out of Rock-Bottom. Wu tells Cole about a legendary Temple of Earth Elementals known as the Heart of the Mountain. Surmising that the Temple is actually real, Wu guesses that it might be hidden in Shintaro Mountain and urges Cole to try and tap into his elemental powers to find a way out.
Nya uses her elemental powers to coerce the Munce into agreeing to a truce meeting with the Geckles. At the same time, in the Geckle camp, Kai and Zane are forced to resort to trickery in order to manipulate the Geckles to attend the truce meeting. The Skull Sorcerer learns of the meeting and uses the skull of Hazza D'Ur to resurrect the fearsome dragon Grief-Bringer.
Cole, Princess Vania, Master Wu, and the Lowly arrive at an ancient abandoned temple. Wu realizes it is The Heart Of the Mountain. The group discovers an old abandoned Stone Mech and a mural of Cole's mother, Lilly. In the mural, she is depicted fighting the dragon, Grief-Bringer, using the Spinjitzu Burst. Wu tells Cole about the Burst - a powerful form of Spinjitzu which his mother studied.
The Skull Sorcerer hunts down the ninjas who flee to the Geckle "Strong-Cave". The Skull Sorcerer promises to let the Munce and Geckles live if they turn over the ninja. Nya stumbles on a possible way out of the cave and the Munce and Geckles work together to clear a rubble-strewn tunnel. The Munce and Geckles begin to work past their differences. But then Grief-Bringer forces his way into the cave. Left with no other choice, the ninjas surrender themselves but not before the Skull Sorcerer imprisonments all of the Geckles and the Munce.
Cole discovers that the stone mech is powered by Elemental Earth energy and uses his powers to activate the mech. He straps the mech to the mine carts and uses it, like a crude rocket, to blast the mine carts back up the track to the top of the mountain. Along the way, however, the Magma Monster arrives and a desperate battle between Cole and the creature ensues. During the aftermath, Hailmar and the Winged Guards of Shintaro arrive and are preparing to arrest Cole and Master Wu on King Vangelis's orders but not before Vania challenges Hailmar so he'll listen to her.
Cole and the Upply arrive at the Skull Sorcerer's Keep and find the ninja locked into cages. The Geckles and Munce have been put back to work in the chain gang, mining Vengestone. While Jay is formulating a plan, he sees the Skull Sorcerer draw the two fabled Blades of Deliverance. Hoping to retrieve the blades, Cole sneaks into the Skull Keep while Wu and the Upply set about freeing the ninja.
As Cole and the Skull Sorcerer face-off, the Geckles and Munce storm the Keep. Plundar frees the ninja from their cages and the ninjas join the battle. Vania arrives leading the winged Shintaro Guards. The Skull Sorcerer destroys the supposedly "fabled" magical Blades, revealed to be nothing more than ordinary swords. Grief-Bringer awakens and joins the fight, and all looks lost. But at the last minute, Cole manages to use the Spinjitzu Burst and defeats the Skull Sorcerer. After his defeat Vania has now proclaimed herself the Queen of Shintaro while the ninja leave the Ivory City, seeking a new adventure on their path. Wu states that he would rather continue and go wherever the wind takes them.