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This article contains plot details.
The story begins with Master Eon greeting the player, a new Portal Master. He explains about the world of Skylands and how Portal Master and Skylanders kept peace and balance. However, Skylands is now in danger and needs the help of the new Portal Master. On Shattered Island, the Skylanders meet up with Hugo, Eon's assistant, and Flynn, a balloonist.
The Skylanders save villagers from a freak tornado and the group makes their way to the Ruins. Along the way, Hugo explains to the Portal Master about how Skylands reached its current state. Skylands has long been protected by Portal Masters and Master Eon, the last good Portal Master, guarded the Core of Light with the help of his Skylanders. This "Core of Light" was a machine that repelled the Darkness, the ultimate force behind all evil, from Skylands.
Kaos, an evil Portal Master who once attempted to destroy the Core, returned from his banishment. He once again attempted this plan, intending on ruling over Skylands as its emperor. The Skylanders fought against Kaos' forces and just as they were about to win, Kaos unleashed a mysterious creature that succeeded in destroying the Core. This caused the Skylanders to be banished and they eventually reached Earth, where the lack of magic turned them into toys. They were left with no choice except to wait for a new Portal Master to find them. Master Eon also survived but he was rendered a spirit and couldn't fight the Darkness without a physical body.
In the present, Cali is rescued from a group of evil Drow. Hugo then begins to send the Skylanders on missions to find the Eternal Sources needed to rebuild the Core of Light. However, Kaos becomes aware of this and tries to stop the Skylanders, failing along the way. With help from allies such as Gurglefin the Gillman, Arbo the Tree Person, and T-Bone, a skeleton, the Skylanders recover the Eternal Sources. Once the Core is rebuilt, the Darkness is repelled and Kaos is driven back. However, Kaos still has the weapon he used to destroy the Core.
The Skylanders use the Core to teleport to Kaos' lair. Fighting through many enemies, the Skylanders confront Kaos face-to-face. During the battle, Kaos summons his most powerful minion: the Hydra. This is the creature that destroyed the Core. However, Kaos is still defeated and he, his minions, and the Hydra are imprisoned at the Ruins.
Kaos then vowed to keep returning to Skylands until it was his. Master Eon gives some coordinates to Hugo and they are put into the Core of Light. As Hugo does this, Kaos attempts to bargain with him, saying that he'd share Skylands if Hugo sets him free. Hugo then sends Kaos to Earth where he becomes a toy and is tormented by a dog. Master Eon then appears to the new Portal Master, explaining that even with Kaos and the Darkness gone, there is still much to do.
The game has received generally favorable reviews.
- The plot of the game differs between the main console versions (PS3, etc.) and Nintendo's 3DS version.