The palace is visited by the Sultana. The Sultan brings her to his toy room. The Sultana later tells everyone about Agrabah and says that it should be destroyed. She then reveals that she's really Mirage in disguise and she shows them a small black pyramid outside the city walls. The cat-woman tells them that the city will be ripped apart and she disappears. The gang sees that the pyramid is actually just the top of an obelisk. Genie goes to it to test it. He sees nothing wrong with it until half of the binoculars he was using disappears. He takes Aladdin to the palace garden to tell him that Mirage's plan is a shadow and everything it touches vanishes. Aladdin says that the shadow will stretch as the sun sets.
Aladdin and the others stand next to the obelisk to figure out a way to get rid of it. Mirage appears inside the obelisk and tells everyone that there's a magic mirror that can stop the shadow and it can only be found at the top of the world. She also tells them that if they don't get the mirror, everyone will blame Aladdin. Aladdin, Jasmine, Abu, Iago, and Carpet leave for the top of the world while Genie tries to get rid of the obelisk. Aladdin and the others are at the north pole and they enter an ice cave. When they get in, Mirage's silhouette appears on a wall and tells them that the cave has a lot of mirrors and that the magic mirror, the truth behind appearances, will save their city.
Aladdin and the others go deeper into the cave and find a lot of mirrors. Meanwhile, the obelisk's shadow destroys the city gates and continues down the street, cutting through buildings. Back at the ice cave, Aladdin finds a mirror that shows a reflection of himself wearing his normal "street rat" outfit. That mirror is the truth behind appearances, so he picks it up. Iago finds a mirror that shows a reflection on himself wearing gold and jewels. The parrot picks it up and the cave starts to collapse.
When the gang leaves the ice cave with the magic mirror and get back to the palace, Genie and the Sultan congratulate Aladdin, with everyone, especially Jasmine, being suspicious. After Aladdin stops the shadow, the city congratulates him as well. Now that the shadow is gone, Abu and Iago get on Carpet to get food at the marketplace. When they get there, they find it strange how it's completely empty. Abu puts an orange in his mouth, but it tastes strange and when Iago picks up another orange, it disappears. They then run into Mirage.
Back at the palace, everyone is still congratulating Aladdin with Jasmine still suspicious. Abu and Iago fly back inside acting really strange. The Sultan then tells Aladdin that the city is cheering for him and suggests that he should join them. Jasmine goes to her room. When she looks at herself in the mirror, Genie appears and the princess tells the jinn that she has a feeling that she's not in Agrabah. Genie then turns out to be Mirage in disguise. The cat-woman takes Jasmine to Morbia in her sphinx-shaped home. Abu, Iago, and Carpet are there too. Everyone realizes that the Agrabah they were just in was just a mirage and their friends, except Aladdin, were fake.
Back at the palace, after fake Jasmine tells Aladdin "was there ever a doubt?", Aladdin becomes suspicious and realizes that the real Jasmine was right. The mirage disappears and Aladdin is really alone in the desert with the mirror and it is almost sunset. At the obelisk, Genie is still trying to get rid of it.
Mirage and the gang appear. The cat-woman assumes that she defeated Aladdin, but Genie shows her that it's still not quite sunset and that Aladdin still has time to get rid of the shadow. Aladdin flies to the roof and the obelisk's shadow hits the mirror and it goes back destroys the obelisk. At the throne room, this time everyone is really proud of Aladdin for saving the city.
- The Sultana resembles the Queen of Hearts from Alice in Wonderland.
- The Cave of Wonders is mentioned in this episode when the gang are going into the cave of mirrors and Iago recalls the event of Abu's mistake when he says; "Don't let him touch anything! Remember the Cave of Wonders incident", which makes Abu snarl and jabber in anger.
- When Genie tries to move the obelisk as Paul Bunyan and Babe, an instrumental version of You're Only Second Rate (previously heard during the credits of The Return of Jafar) plays in the background.