The majority of the story takes place in the parallel world of Fantastica (referred to as Fantasia in the films), a world being destroyed by the Nothing. The first protagonist is a young warrior, who is asked by the sick Empress to set off and find the cure for their world. The other protagonist is a boy from the real world, a reader of the novel with the same title, for whom the story gradually becomes more and more realistic.
The book centers on a boy, Bastian Balthazar Bux, who meets a mysterious man who owns a small antique bookstore and steals a book from it called The Neverending Story, which he reads.
The book begins in Fantastica (Phantásien in the German novels; Fantasia in the films), when a "will-o'-the-wisp" goes to ask the Childlike Empress for help against the Nothing, which is spreading over the land. The Empress herself is ill, which is believed to be the cause of the Nothing (or viceversa); she sends the only person that can stop the Nothing, a boy warrior named Atreyu, to find a cure for her. Atreyu is a brave person, but everyone thought he was a man even though he is a young boy.
While on his quest, Atreyu meets characters such as Benjamin, Uyulala, and the gnomes Urgl and Engywook. Atreyu also meets Falkor, the luckdragon, who helps him along the way. After Falkor accidentally drops Atreyu in Spook City, Atreyu meets G'mork the werewolf, who has been following Atreyu since the early days of his quest, intending to kill him. G'mork soon dies; Falkor and Atreyu leave Spook City to find the Ivory Tower, where the Childlike Empress lives. The Childlike Empress reveals that the only thing that can save Fantastica is a human child, who must give her a new name to start again the cycle of life in Fantastica.
Bastian comes to Fantastica by naming the Empress 'Moon Child'; she asks him to help re-build Fantastica with his imagination and he subsequently has many adventures of his own in his new world. With the help of the Auryn, a Gem that links him to the Empress and gives him power over all the inhabitants of Fantastica, Bastian explores the Desert of Colors, battles the evil Xayide, and meets the three Deep Thinkers. Bastian becomes friends with Atreyu, although their rivalry leads to a fight in which Atreyu is wounded. Bastian thereafter is corrupted by Xayide, who drives him to a lust for power. He is defeated in his attempt to start a coup d'état against the Childlike Empress.
Eventually, Bastian and Atreyu reunite and Bastian soon returns home. He decides to return the book to its owner, Carl Conrad Coreander, but the book disappears after Bastian returns from Fantastica. He explains this to Carl Conrad Coreander, who is interested in Bastian's adventures and wants to keep in touch to talk about them.
AURYN is a mystical talisman in The Neverending Story. In the novel, AURYN is always spelled in capital letters and is revered by all Fantasticans, referred to as "The Gem" and "The Glory." It is a symbol of its mistress, the Childlike Empress, who is also called "The Golden-Eyed Commander of Wishes" in reference to her relationship with AURYN. While the book makes noteworthy the point that the image of AURYN is on its "cover(s)", it doesn't actually refer to it as AURYN.
Two mythological serpents, symmetrical, bite at the other's tails. In the book, they are not specifically, nor always, intertwined. One serpent is gold and one is silver. Each has an eye to correspond to the color of the book's print, red and green. The symbol is reminiscent of ouroboros or the mythological Jörmungandr and the Zodiac Pisces. It also may be noted that the film version has the two snakes in an "Infinity Knot", a more intricate variation of the figure "8" infinity symbol and another sign of ouroboros. The two snakes represent the dual nature of the two worlds, Fantastica (German: Phantásien) and Reality, but also the twin nature of their mutual creation and destruction. There may also be a relation to the Gates of Horn and Ivory of Virgil's Aeneid. On the back of the AURYN are these words:
"Do what you Wish" (German: "Tu, was du willst").
AURYN helps guide Atreyu through Fantastica in his quest to find a cure for the ailing Childlike Empress, and in turn defeat the Nothing. It serves him clandestinely, but does return him to the Ivory Tower. Although Atreyu believes himself to have failed in finding the human child past the borders of Fantastica, the Childlike Empress informs him to the contrary and that indeed the boy had been with him all along.
In the hands of the Childlike Empress, the AURYN displays greater powers even in the face of the Nothing. She releases seven spirits to serve her as she ventures across her tattered realm to find the Old Man of Wandering Mountain. They carry her chariot and provide a haven for Atreyu and Falkor within.
Bastian christens the Childlike Empress with her new name. She presents him with AURYN with her only request being that he follows the instructions written on the back. While it grants him the power to make wishes and imagine more of Fantastica, it drains him of his memories which are his only way back to his world. Bastian searches for the same obscure boundaries of Fantastica only to realize it was within AURYN itself.
In the mystical interior of AURYN, two gargantuan serpent statues stand sentry, one shining brighter than white, the other darker than black. They guard the Waters of Life, a waterfall and pool that serve as the exit from Fantastica. The statues refuse Bastian's passage, for he had left many stories unfinished in Fantastica. Atreyu however agrees to undertake the quest, which allows Bastian to return to his world. When Bastian touches the waters, their truthful properties dissolve the illusion of his glamor wishes, and he returns to being a fat little boy, instead of a Fantastican Prince.
The Legends of Fantasia have been published in Germany, Japan, Spain, and Cyprus. Currently there are no plans to publish these books in English. AVAinternational are in negotiations with publishing houses worldwide, but claim they "haven't got a concrete offer of an English-language country". The six novels published to date are:-
The NeverEnding Story II: The Next Chapter, directed by George T. Miller and starring Jonathan Brandis, was released in 1990. It used a number of plot elements from the second half of Ende's novel, but told an essentially new tale.
The NeverEnding Story III, starring Jason James Richter, Melody Kay and Jack Black, was released in 1994. This film was based only upon the characters from the Ende book, having a completely new story.
The Neverending Story has also inspired two television series. The 1996 animated series focuses on Bastian's further adventures in Fantastica, largely different from his further adventures in the book, but occasionally containing elements of them. The live-action Tales from the Neverending Story re-told the whole story as an ongoing series lasting 13 episodes.
The Neverending Story has also been adapted to the dramatic play, ballet, and operatic media in Germany. The scores to both the opera and the ballet versions were composed by Siegfried Matthus.