The first scene shows Marnie Piper cleaning out her closet with magic. During this time Marnie Piper knows that she is selected to Witch U. Her mother doesn't know about it until her mother talks to Grandmother Aggie in the pot (Aggie is giving Sophie witch training, and thus they are lost in some kind of time stream) and Aggie tells Marnie, "Oh, and by the way Marnie, congratulations!" "Congratulations on what?" Gwen asks, and Marnie tells her that she had been selected to go to Witch U. Gwen disagrees with it, and Marnie says she wants to go. "Fine," Gwen says, "but I won't pay for it." Marnie tells her no problem as she opens an acceptance letter and a woman there says that Marnie has been offered a full scholarship to Witch U.
Marnie and Dylan get ready to go to Halloweentown. Marnie opens the portal as she bids good-bye to her mother. Gwen gives Marnie a witch's glass in a form of a watch in which, if she needed her, then mother Gwen would help her. As they step into Halloweentown, they see Benny, the cab driver in Halloweentown. He drives them there telling them a bunch of skeleton jokes. There, they meet the Sinister Sisters. Dylan is in love with them immediately. Marnie uses magic to lift her suitcases, but a man stops her. She and Dylan trip over the bags and find out they can't use magic at the school. Marnie is frustrated. She asks Dylan if it was time for him to go back home, but Dylan tells Marnie that he is staying; Gwen wouldn't let Marnie go unless Dylan did.
Then, Marnie and Dylan meet the Chancellor. The Chancellor doesn't seem to know who Dylan is. Marnie goes up to her dorm and is visited by her grandma Aggie. Aggie explains that Sophie is traveling through time and space and couldn't see her at the moment. Aggie infers that there is something going on in Halloweentown, but a disruption causes Aggie to disappear. Marnie receives a letter and is whisped away into a Genie's lamp where she meets Annesa. Annesa gives Marnie information on whats happening with the school.
During one of Marnie's classes, a silver box with the words "S.Cromwell" on it presents itself to her, as if it belonged to her. The box is confiscated by the Chancellor. Later in the movie the Chancellor, the Sinister Sister's father (Silas), and some of the teachers are in a group called the Dominian that Ethan's father used to be. They want a gift in the silver box that belonged to a relative of the Cromwell family (S. Cromwell). They plan to try to get Marnie to open it.
After one of her classes, Marnie goes to Professor Periwinkle who tells her that S. Cromwell stood for Splendora Cromwell. Professor Periwinkle was Splendora's best friend. Marnie goes to Dylan and asks him for help on finding more information on Splendora. He leads her to the Library where he reveals that he uses magic to "speed read", which gives an explanation to him skipping a grade. He discovers that Splendora hid the Gift (with a capital G) in that silver box for a thousand years. The Dominion watches him and decides to use him in their plot to take over Halloweentown. The Sinister Sisters cast a spell on him to make him do their homework. Marnie finds this out while on a date with Ethan. Marnie goes to Professor Periwinkle and askes her for help and she helps Marnie to go 1,000 years into the past to find Splendora and ask her about the Gift. Splendora told her that the "gift" was a necklace that had great power that gives someone complete control over any person, which is why the Dominian wants it so they can rule Halloweentown. Splendora, who is really Aggie, took the name Aggie because her middle name was Agatha. She also found out that Aggie's father was Marvin who was Merlin's cousin and knew King Arthur, which was mentioned in Halloweentown.
When Marnie returns it is Halloween and she needs to find two more witches(or warlocks) to help her destroy the Gift. Marnie finds Dylan still under the control of the Sinister Sisters who turn him into a dog. Marnie calls on her mom for help but is transported to the Dominion's Lab. They tell her that if she doesn't use the gift to put Halloweentown under their control, then Dylan will be a dog forever. Soon Gwen came to help. Marnie makes a secret plan to stop the Dominion.
On Halloweentown Night, Marnie tricks the Dominion when she receives the gift and orders herself, Dylan, and Gwen destroys the gift to save Halloweentown. The Dominion try to escape, but they are caught and trapped by Pr. Periwinkle. It is later found out that Ethan is now a mortal because since his father's crime his father was forced to give up his magic and so Ethan decided to renounce his own, meaning, he volunteered to give up his magic and wasn't forced. It is also found out that the Sinister Sisters lose their powers. They hilariously exclaim, "We might as well be ugly!". Gwen also decides to let Dylan and Marnie stay at Witch U. At the end it is discovered that Marnie didn't really destroy the gift and that she actually gave it to Dylan, who hides it in a book, the door closes and the credits roll.
- Sara Paxton - Marnie Piper and Young Splendora Agatha Cromwell
- Lucas Grabeel - Ethan Dalloway
- Joey Paul Zimmerman - Dylan Piper
- Kristy Wu - Scarlett Sinister
- Kellie Cockrell - Sage Sinister
- Katie Cockrell - Sapphire Sinister
- Keone Young - Silas Sinister
- Leslie Pomeroy - Chancellor Goodwin
- Dan Young - Professor Ichabod Grogg
- Millicent Martin - Professor Periwnkle
- Debbie Reynolds- Splendora Agatha Cromwell
- Summer Bishil - Aneesa the Genie
- Judith Hoag - Gwen Piper
- Christopher Robin Miller - Burp-urp-snurt-pftftftfftf III
There are at least two known deleted scenes. One that was shown in the trailer for the movie, were Marnie and Dylan show their IDs to a Pumpkin-headed guy with a sword riding on a horse. There was another deleted scene at the ending where Dylan uses the Gift to hypnotize the Sinister Sisters to do whatever he wants, and kisses them also. There was also a scene that was filmed, but cut, were Marnie and Ethan kiss.
- Splendora (Young Aggie) says she'll train Marnie herself, but Marnie never mentioned this. Is it a tradition for grandmothers to train their granddaughters then?
- It's revealed that witches can live for centuries, given Professor Periwinkle and Aggie Cromwell had been around since the Middle Ages; however, how witches age is left to question as no versions of them between those times are seen.
- This movie suggests that the reason Aggie had been trying so hard to get Gwen to train Marnie in witchcraft was because of the visit college-aged Marnie paid to her in the past.
- If Marnie had been allowed to lose her powers (as Gwen wanted in the original film), it would effectively rewrite history; if she hadn't gone back in time and helped Aggie seal away the Gift by taking the key to the box it was locked in, the Dominion would have been able to gain control of Halloweentown in the Middle Ages. And who knows what else could have changed.