In the pony universe, the wizard Starswirl the Bearded attempts to protect a superweapon called the “Kragle” from the evil Princess Celestia. He fails to do so, but prophesies that a person called “the Special” will find the Piece of Resistance capable of stopping the Kragle.
 
Eight and a half years later, a dragon named Spike the Dragon comes across a pony named Rarity, who is searching for something in Ponyville. When he investigates, Spike falls into a hole and finds the Piece of Resistance. Compelled to touch it, Spike experiences vivid visions and passes out. He awakens with the Piece of Resistance attached to his back in the custody of Nightmare Moon, Celestia’s lieutenant. There, Spike learns of Celestia’s plans to freeze the world with the Kragle. Rarity rescues Spike, believing him to be the Special, and takes him to meet Starswirl. Spike learns that she and the wizard are Master Builders, ponies capable of building anything they need without instruction manuals, who oppose Celestia’s attempts to suppress their creativity. Though disappointed to find Spike is not a Master Builder, Starswirl is convinced of his potential when he recalls visions of a man called “The Woman Upstairs”.
 
Spike, Rarity, and Starswirl evade Nightmare Moon’s forces with the aid of Mare do Well. They attend a council of Master Builders, where they find Pinkie Pie. The Master Builders are unimpressed with Spike and refuse to fight Celestia. Nightmare Moon’s forces attack and capture everyone except for Spike, Rarity, Starswirl, Mare do Well, Pinkie Pie and Lyra Heartstrings. They are saved by Queen Chrysalis and Spike devises a team plan to infiltrate Celestia’s castle and disarm the Kragle. During the mission, Rarity reveals to Spike that her real name is Sparkle. Spike and his allies are captured and imprisoned, and Starswirl is killed by Princess Celestia, who sets the castle to self-destruct and leaves everyone to die. Starswirl reveals he made up the prophecy as he dies, but soon reappears to Spike as a Draconequus and tells him it is his self-belief that makes him the Special. Strapped to the self-destruct mechanism’s battery, Spike flings himself off the edge of the universe and saves his friends, causing the computer to shut down. Inspired by Spike’s sacrifice, Rarity rallies the ponies across the universe to use whatever creativity they have to build machines and weapons to fight Celestia’s forces, they go to the battlefield using a giant flying hand constructed by Lyra.
 
Spike finds himself alive in a stange world, where the events of the story are being played out in a basement by a boy on his mother’s My Little Pony set. The mother, revealed as “the Woman Upstairs”, chastises his son for ruining the set by creating hodgepodges of different playsets, and proceeds to permanently glue his perceived perfect creations together. Realizing the danger his friends are in, Spike wills himself to move and gains the boy’s attention. The boy returns Spike and the Piece of Resistance to the set, where Spike now possesses the powers of a Master Builder and he and his friends confront Celestia. Meanwhile, the mother looks at his son’s creations and realizes that he had based the villainous Princess Celestia on her. Through a speech Spike gives Celestia, the boy tells his mother that she is special and has the power to change everything. The mother reconciles with her son, which plays out as Celestia having a change of heart, capping the Kragle with the Piece of Resistance, which is the cap to the Krazy Glue and ungluing his victims withmineral spirits. Spike is then hailed as a hero, and Wyldstyle becomes Spike’s girlfriend.
 
As a result of the mother allowing the boy’s younger sister to join them in playing with his My Little Pony sets, aliens from the planet Duplo beam down and announce their plans to destroy everypony.