The episode begins in the Land of Dreams where everyone is celebrating the defeat and banishment of Zordrak, even the Uprney's and Argorribles that had been transformed by the happy hoops. However the Dreammaker is very hesitant to celebrate as he tells Rufus and Amberley they cannot be certain that Zordrak hasn't survived. The Dreammaker eventually decides to join the celebrations, but is still apprehensive about believing that Zordrak has been destroyed.

Meanwhile we learn that Zordrak had survived, we find him crashed on a small planet. On the planet and inside a cave, he discovers the Nightmare Stone. Zordrak says that the Nightmare Stone was cast into the depths of space 1000 years ago to be lost forever. He says that the Nightmate Stone is equal in power to the Dreamstone, but it is only meant to be used with Nightmares. A bunch of weird looking birds are guarding the Nightmare Stone and Zordrak makes them fly him back to Viltheed.

Back in the Land of Dreams, the celebrations continue. However nobody hears the strange noise coming from the sky. It's Urpgor, Blob, Frizz and Nug on one of Urpgor's inventions he has created to get the Urpney army and the Argorribles back. The machine works and the Urpneys and Argorribles drift off following the contraption the noise is coming from. Urpgor, Blob, Frizz and Nug arrive back at Viltheed with the Urpney army and once there Urpgor and Blob argue over who should be in command. Whilst they are arguing Zordrak appears from the shadows, Urpgor and Blob being very shocked to see him back. Zordrak tells Urpgor that his inventions no longer interest him now that he has the Nightmare Stone. He tells Blob and Urpgor to rebuild his throne and then after they are no longer needed. Zordrak goes to the top of Viltheed to set up the Nightmare Stone. He pours his Argorribles onto the Stone and they are then transported along it's rays to the Land of Dreams.

In the Land of Dreams, the dreammaker is sending out the first dreams of the night just as the Argorribles arrive. The Dreammakers dreams are no match for the Argorribles since they had got an extra boost from the Nightmare Stone. The Dreammaker correctly guesses that Zordrak must have returned and gotten hold of the Nightmare Stone. Amberley arrives at the tower room telling Rufus and the Dreammaker that all the Urpney's had vanished, she says some of the other Noops said they had just floated away! The Dreammaker says that Zordrak must have indeed returned. The Noops and the Dreammaker decide the best plan is to go to Viltheed and steal the Nightmare Stone. Wildit trains a bunch of Noops to fly on leaves, having decided they will attack Viltheed as a diversion, while Rufus and Amberley sneak in and take the Nightmare Stone.

The Dreammaker gives Rufus and Amberley a pair of gloves to handle the Nightmare Stone has it would burn them otherwise. He also gives them a necklace that will lead them right up to the Nightmare Stone once they are inside Viltheed.

Back at Viltheed, the Urpney's have just finished rebuilding Zordrak's throne and Zordrak tells Urpgor he is no longer needed and orders him to leave. In his workshop Urpgor dismantles all the machines he had built, in anger of being thrown out. Back in the throne room, Zordrak sees the army of Noops arriving at Viltheed and orders Blob and the Urpney army to man the defences and stop them. Meanwhile Rufus, Amberley and Wildit have arrived at the entrance to Viltheed and Wildit says she will wait for them outside. Just after Rufus and Amberley go inside, an Urpney lands on Wildit's leaf flying off on it so she no longer has any transport. Inside Viltheed, Rufus and Amberley soon find the room that the Nightmare Stone is kept in, but as they are just about to go inside they are captured and thrown into the dungeon. Just after the two Noops were captured Urpgor arrives at the room and takes the Nightmare Stone, vowing to somehow destroy it. He decides that he will throw it into the bottomless pit in the dungeons.

Urpgor arrives at the Dungeon and soon gets rid of the dungeon guard by burning him to nothing with the Nightmare Stone. However when he unlocks the dungeon door, the door flips back trapping Urpgor against the wall, as Rufus had been leaning against it. Amberley picks up the Nightmare Stone with the pincers Urpgor was using to handle it and they head out of Viltheed back to Wildit. When they reach the outside of Viltheed, they see no sign of Wildit. However Wildit arrives on the flying machine the Urpney's had used to get the Urpney army back earlier. She tells the Noops to climb aboard and they leave. Meanwhile inside Viltheed, Zordrak checks on the Nightmare Stone using is viewscreen and is far from pleased once he realises it has been stolen. Zordrak shouts Blob and tells him to find Urpgor.

In the Land of Dreams the Noops and Wildit have arrived home. The Dreammaker tells Amberley to slowly lower the Nightmare Stone into his hands. The Dreammaker then uses his powers to stop the Nightmare Stone glowing and he then throws it into space, hoping that once again it will be lost forever. At Viltheed the birds that had guarded it realise it's leaving the planet and follow it into space. Inside Viltheed, Zordrak says he wants the Nightmare Stone back as well as obtaining the Dreamstone. He says that the Land of Dreams must be annihilated!