After vanquishing the darkness and defeating the Shadow Ghost, Katy finds her way to Dreamland. The town is full of shops and businesses. Children are laughing and playing everywhere you look. The Dream Queen's magical scepter is what keeps Dreamland a happy place. Without it, Dreamland would fall to darkness and become a place of sadness and dread. When someone steals the magical scepter, it's up to Katy to locate the scepter and save Dreamland before all is lost.