Derek’s and Odette’s kingdom is preparing a celebratory Festival Days. Meanwhile, the evil sorceress Zelda, who was once a partner of the evil sorcerer Rothbart, plans to wreak havoc to the kingdom by stealing Rothbart’s notes on the Forbidden Arts. As part of her plan, she captures a yakey-bird named Whizzer, who has the ability to imitate any voice after hearing it only once. Though Zelda’s magical abilities are limited, she can create a magical fireball that can home in on anyone she commands it to. Threatening his life with this ability, she sends Whizzer to the Swan Lake castle as a spy. Whizzer overhears that Derek secretly kept Rothbart’s notes on the Forbidden Arts, despite him telling Odette before that they have been destroyed.
After Whizzer informs Zelda, she goes to the castle pretending to be an ”accordion slave”. She flirts and charms over Lord Rogers with a story about how she has escaped a king who had her locked up and play the accordion constantly. Rogers falls for Zelda and invites her to stay at the castle, despite the current reservations of Queen Uberta, Derek’s mother. That night, Zelda steals the treasure chest with Rothbart’s notes and escapes. To her dismay the notes are incomplete, preventing her from gaining the full powers. Zelda questions Whizzer and learns that Derek kept the remaining portion somewhere else.
Zelda casts a seeker to find Odette, while Whizzer is sent to Derek with a ransom note. The seeker successfully brings Odette and Jean-Bob to Zelda’s lair. Elsewhere, Derek receives the ransom note and retrieves the final Forbidden Arts note from where he’d hidden it in the library. Whizzer is captured by Speed and Puffin, who convince him to help them stop Zelda. Whizzer eventually agrees and the group heads out to help Derek to rescue Odette.
After Jean-Bob frees Odette, she attempts to sneak off with the notes only to be caught again. Zelda then transforms Odette into a swan, and imprisons her and Jean-Bob in a dome of green fire that would destroy her if she tried to escape. When Derek arrives at the meeting to pay Zelda the ransom, he is tricked into handing over the final note to her while disguised as Odette and giving her full power of the Forbidden Arts. Derek, along with the group, managed to find Zelda’s lair and free Odette and Jean-Bob as Zelda was absorbing the Power to Destroy. Derek and the others face her in battle. In the fight that ensues, Zelda conjures up a seeker and casts it at Odette. Odette, with Puffin following her, flies away from the lair in an attempt to escape. Whizzer distracts Zelda by imitating Rothbart’s voice, allowing Derek to snap her wand in two. Zelda falls back onto her own fire spell and is destroyed. Puffin arrives to inform Derek that Odette was killed by the seeker. Derek is heartbroken, regretting that he had not destroyed the Forbidden Arts notes earlier. He destroys the notes by setting them on fire, and the flames take on the shape of a swan, from which Odette materializes, having returned to life.
The kingdom is at peace and harmony once again. The Festival takes place as planned with Jean-Bob winning the obstacle course and becoming prince for a day (with a little outside help from Whizzer), as well as Uberta and Rogers winning the talent show. Derek and Odette watch the proceedings and kiss.