The story begins in the 90s in the beautiful lands of the Philippines, where a young girl named Jo (H.E.R.) is adjusting to a new school environment. Jo is excited about her family history project, which revolves around the enchanting island of Nakali, a place filled with magic and mythical stories that her grandmother, Lola Fatima (Dolly De Leon), used to share. However, her tales draw the ire of some classmates, particularly a boy named Reynaldo. In a moment of frustration, Jo retaliates, leading to an unexpected visit to the principal's office.
During her time at school, Jo encounters a fellow student named Raissa (Liza Soberano), who also finds herself in trouble for standing up for Jo's fantastical claims. This marks the beginning of a deep friendship between the two girls. As they navigate their school years together, Raissa's presence and the stories of Nakali help to fill the void in Jo's life. When they graduate, the bond remains strong, but the loss of Lola Fatima becomes a pivotal moment for Jo.
As Jo prepares for college, hoping to stay connected with Raissa, her plans are disrupted when Raissa announces her acceptance to Caltech in America. Although Jo feels disheartened, she supports her friend's ambitions. At a farewell party, Jo dresses in a chicken costume from her job, where Raissa’s mom decides to embarrass Jo by showcasing childhood pictures. In the midst of the awkwardness, Jo tries to lighten the mood by entertaining everyone with a dance, but inadvertently causes chaos by setting the lechon on fire. As this unfolds, Jo hears Raissa's mom lamenting that Jo is a burden to her daughter.
In a bid to share one last adventure, Jo sneaks Raissa out for a nostalgic beach outing. They reminisce under the stars, when a mysterious sand dollar washes ashore. This moment magically opens a portal to Nakali, a location both are familiar with, where they leap into the vibrant, mystifying world. However, upon arrival, they realize that more than twelve hours have passed. Raissa finds herself transformed, sporting wings, while Jo discovers she no longer possesses the sand dollar needed to return home.
As they navigate Nakali, they meet Raww (Dave Franco), a quirky weredog who claims to have been with them during their previous visit. Together, they must evade Manang (Lea Salonga), the fearsome Manananggal, who is determined to reclaim her stolen wings. They soon find Batiba (Jenny Slate), a cat-like creature who extracts human memories, offering to send them home if they trade their cherished charm bracelets that symbolize their memories together.
Refusing to part with their significant memories, the trio embarks on a quest to retrieve the sand dollar. Their journey includes quirky encounters with a demon baby named Bungi (Manny Jacinto) and the whimsical Duwende, leading them to a series of misadventures where Jo accidentally breathes fire, creating a chain of chaotic events that implicate the mystical beings of Nakali.
The tale thickens as Jo's impulsive nature causes more trouble, leading her to assertively embrace her feelings for her friendship with Raissa. Jo's whimsical nature clashes with the Duwende's customs, leading to misunderstandings that nearly cost them their chance to return home. As they piece together their adventures and confront various obstacles, they realize they must reclaim their past to safeguard their future.
In a heart-wrenching climax, Jo makes a deal to trade away her memories for Raissa's safety, propelling them apart. Raissa is effortlessly returned to the beach, feeling the pangs of betrayal and heartache. Meanwhile, the call of friendship proves strong, igniting Raissa’s resolve to rescue her best friend. She plunges back into Nakali to reclaim their shared memories from the clutches of Batiba, prompting a powerful confrontation with Manang.
Through their undying camaraderie, Jo and Raissa find their way back to each other, true to their strong connection that defies even the most magical barriers. They return to the real world, equipped with a deeper appreciation for their friendship.
Years later, Raissa finds herself at an event for Jo's new comic book inspired by their Nakali adventures, where Jo creates a narrative that positions Raissa as a heroine. Though she is puzzled by her portrayal of a love triangle, both of them cherish their extraordinary bond, ready to embrace new experiences together as a portal to Nakali opens once more, inviting them on yet another adventure.
