Barbie is telling a story to her little sister Kelly. Kelly is feeling uncertain about her talent at painting.
Rapunzel is a servant of the witch Gothel, who lives in an isolated forest manor. She has grown up believing that Gothel rescued her from being abandoned as a baby. Rapunzel has a pair of friends: Penelope, an extroverted dragon, and Hobie, a rabbit who worries a lot. Whatever free time Rapunzel has, she spends painting beautiful landscapes of places she dreams of traveling. However, Gothel does not approve of Rapunzel’s hobbies and scolds her for not appreciating all that Gothel has done for her.
While making tea for Gothel, Penelope accidentally discovers a secret staircase which leads down into a secret old room far below the manor. In it she and Rapunzel discover a present from her parents who she’s always been told deserted her: a silver hairbrush with the following engraving: “Constant as the stars above, always know that you are loved. To our daughter, Rapunzel on her first birthday. With Love Forever, Mother and Father.” These words leave the young artist shaken and questioning the truth of her past. Her thoughts are interrupted, however, by Gothel’s calls for her tea.
After serving Gothel her latest meal, Rapunzel and her friends return to the cellar where Penelope discovers another secret: a tunnel which leads all the way to a nearby village. Rapunzel finds it leads to a small kingdom and find herself rescuing Princess Katrina from a pitfall. Katrina introduces Rapunzel her elder brother, the handsome Prince Stefan. He explains the trap Katrina escaped with her help was devised by King Wilhelm, the ruler of a kingdom theirs is at odds with. Enthralled by the mysterious and enchanting Rapunzel, Stefan asks to meet her again. She agrees wholeheartedly, although she has to rush back to the manor before Stefan gets a chance to tell her his name. The whole exchange, unfortunately for Rapunzel, had been witnessed by Gothel’s pet ferret, Otto.
The furious Gothel orders Rapunzel to tell her the name of the boy she met up with. Rapunzel insists that she has no idea, but Gothel decides she’s lying. Rapunzel insists that Gothel cannot keep her under lock and key forever, to which Gothel replies: “Watch me”. Gothel then destroys all of Rapunzel’s paintings, brushes and paint, before turning her bedroom into a high tower, stationing the monstrous Hugo, Penelope’s father, to watch guard. Gothel tells Rapunzel that she will not let her go until she gives her the name of the boy she met.
Later that night, Rapunzel is dreaming. In her dream Prince Stefan discovers her tower. He climbs her long hair, and they are just about to kiss when Gothel suddenly appear and separates them. Rapunzel wakes up, and re-reads the engraving on the hairbrush. She realizes there is still hope for her and goes back to sleep. As she does, there is a shower of light, and her hairbrush transforms into a paintbrush.
Unknown to both sides, Gothel is in fact the wicked puppet-master of the conflict between Katrina and Stefan’s father and King Wilhelm and is gleefully watching while the two kings try to destroy each another and their kingdoms.
Hobie and Penelope cheer up Rapunzel replacement painting supplies for the ones destroyed by Gothel. Hobie comes across the paintbrush, offers it to Rapunzel and she begins to paint. It quickly becomes obvious that she is not required to paint at all with this paintbrush, whatever she paints becomes reality. Rapunzel now paints the small village she visited earlier, and then steps into it, enters the gardens of the palace and finds Stefan.
Sheask for help finding the maker of the brush, and makes him promise he will never tell her his name. They find a silversmith who tells her his brother, who lives in King Wilhelm’s Kingdom made the brush. The silversmith confessed he it’s been years since he’s seen his brother, and just thinking about that makes upsets him deeply. Seeing this, Stefan begins to realize that the conflict between the Kings is hurting the villagers more than he could have imagined.
Later, Stefan invites Rapunzel to a masked ball. She tells him that she will see him there. He replied her hair would be a ‘beautiful give away.’ Penelope shows up, explaining to them that Gothel is on her way and they must go so Hugo will have to bear the brunt of the witch’s anger. Rapunzel agrees and her way back to the tower.
Back in the tower, Rapunzel uses the paintbrush again, this time to create herself a beautiful gown for the ball. Hobie and Penelope give her a mask to wear. The light created by the paintbrush is visible from outside the tower. Otto sneaks in and steals her invitation from under their noses and takes it to Gothel.
Infuriated again, the witch shows up at the tower, cuts of off Rapunzel’s hair, and smashes the paintbrush into tiny pieces, and even destroys Rapunzel’s painting of the village. Certain Rapunzel is lying to her, Gothel cast a spell on the tower, which will keep anyone who lies there forever, and ensures the spell is unbreakable. Gothel then storms off to Stefan’s father, King Frederick’s castle, aiming on destroying the both of them. Back in the tower, Rapunzel escapes with the assistance of Penelope and Hugo, and head off as quickly as she can to save Stefan.
Stefan is enticed away from the ball by who he thinks is Rapunzel, but it is actually Gothel in disguise. Gothel reveals herself and attacks the boy. King Wilhelm then confronts King Frederick, intending to end their conflict by force. Apparently their conflict comes from King Wilhelm’s believe King Frederick stole his baby daughter, who has been missing ever since. Frederick tells the other King he had nothing to do with the kidnapping and does not know what became of Wilhelm’s daughter. Gothel appears in her moment of triumph to tell both men it was she who kidnapped Rapunzel. Why? Revenge. Because she was in love with Wilhelm, but he only though of her as a friend, and chose to marry another woman. Rapunzel shows up in the nick of time just as the two kings are about to fight, and the shocked Wilhelm realizes he’s found his daughter.
Gothel turns and attacks Rapunzel with her magic, chasing Rapunzel into the Castle’s hedge maze. Rapunzel then recalls the magic painting of the tower and fools Gothel into running right into it. The witch discovers she is now locked in the tower she made for Rapunzel’s, where Hugo reminds her there will be no escape for her, since she has the heart of a liar.
Rapunzel is reunited with her parents, and marries Stefan. Thus the kingdoms are re-united and the King’s reconcile. Hugo, Penelope, Hobie move into the castle to live with them. Otto remains with Gothel to serve her, but apparently she did not live long after being imprisoned in the tower.
Later, Rapunzel and Stefan are walking along a beach, with a castle in seen in the distance, which happens to be exactly like one Rapunzel painted, an implication that her dreams truly did come true, which then becomes the very picture Barbie had been painting.
Kelly now feels better and begins painting with blue which turns into the credits.
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