Barbie is telling a story to her little sister Kelly. Her first time at camp overnight, Kelly is feeling anxious. Barbie has remembered the story after looking up at the night sky, and spotting the constellation Cygnus, the Swan.
Her story starts with the girl Odette at her the bakery that her father owns. She is dancing happily because she has mastered a very difficult series of ballet moves. It is also revealed that her sister is very capable when it comes to riding fast horses.
Odette’s dance is interrupted when a Lila, a unicorn show up in the village and, in order to escape the hunters following her, flees into an enchanted forest. The inquisitive Odette follows the unicorn, and discovers that Lila had gotten herself ensnared. While looking around for something to help, Odette finds embedded in a tree, a magic crystal (that has been created to defeat Rothbart). Odette doesn’t know is the Fairy Queen is watching and is surprised when she suddenly appears.
After Odette uses the crystal to free the unicorn, the Fairy Queen explains that the crystal chose her by allowing her to remove it from the tree. The Queen tells Odette that her cousin, Rothbart has been a terrible plague, and that she has been chosen to rid the forest his evil. Not wanting to risk her life by getting in the middle of a feud between fairy royals, Odette turn the queen down.
Although she accepts Odette’s refusal, the Fairy Queen sends Lila to lead the girl out of the forest and continue to attempt to get Odette to help. Rothbart and daughter show up and corner Odette by a tree. Wanting to use Odette and the crystal himself to defeat the Fairy Queen, the evil wizard casts a spell that turns Odette into a swan. Coming across her later, The Fairy Queen tries to counter the magic, but her attempt only works so far as to allow Odette to regain her human form at night. Every day she must turn back into a swan.
Odette comes across the other inhabitants of the enchanted forest that have been similarly transformed. Among others, she meets Ivan, who is has been turned into a porcupine and Carlita, who has been turned into a skunk. Finding that Odette has disappeared, her father and sister Marie start looking for her. Meanwhile, at the castle in Odette’s village, the mother of the wayward Prince Daniel is disappointed with her son. Apparently he is more interested in exploring his realm than being obedient to his mother and getting married.
To protect her from any more of Rothbart’s evil magic being inflicted on her, the Fairy Queen gives Odette a crown with an embedded crystal to protect her. To find a way to completely remove the spell on her, the determined Odette heads to a magic library for help. Odette is dismayed to find that the librarian can’t find a book that can restore her permanently.
Deciding he needs assistance to hunt down Odette, Rothbart gets Prince Daniel to help him out. However, Daniel cannot bring himself to kill such a beautiful and enchanting swan. And once her true form is revealed, he and Odette fall in love, and they dance together in the forest. Day comes, however, and Odette once again turns back into a swan.
Later, Daniel invites Odette to a ball. She refuses the invitation, but Daniel is persistent, and she finally agrees to come. The troll librarian from the Magic Library, Erasmus, arrives, having finally found something in a book that has an answer for their troubles. He explains that true love can defeat the evil wizard’s spells. The Fairy Queen realizes that Daniel and his love for Odette will save them all. She begins to instruct Odette in a waltz she can dance at the ball, but then Erasmus is kidnapped.
Erasmus is rescued, but not before he tells Rothbart how his evil plans will be defeated. To counter the Fairy Queens’ plan to defeat him, Rothbart casts a spell that makes Odile appear like Odette to Daniel.
Odette learns of this, and tries to get to the ball in time to stop the evil wizards plan, but by the time she gets there, Prince Daniel, thinking Odile is her, has already pledged his love. Unable to stop him, since she is still trapped in swan form, Odette collapses. The crystal that had been protecting her is now powerless and she is now gravely weakened.
Feeling his scheme has triumphed, Rothbart reveals to Daniel that he pledged his love to Odile, and the wizard and his daughter make their leave. Daniel chases after them while the Fairy Queen tries to heal Odette. Rothbart return and stops the Fairy Queen’s attempts by turning her into a mouse. He then tries to end the threat of Odette and Daniel’s love by killing them. The two, however, collapse together, with their hands intertwined.
Suddenly, the power of the crystal envelops them and shines outwards, the magic of their true love defeating the evil wizard. When they awaken, the find the all of Rothbart’s magic has been completely undone. Now Odette and Prince Daniel can freely acknowledge their love for each other without fear of trickery. All the inhabitants of both the enchanted forest and the village rejoice. Odette and Daniel now happily engaged. And the evil Rothbart and his daughter? He has been transformed into a Cuckoo Clock and Odile is a now a common maid.
Kelly promises she will take part in next day’s race, having gained a new confidence in herself after listening Barbie’s story. Barbie smiles and her sister heads of happily to bed yawning.
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