In the inter-dimensional world of dreams, Jim and Smee continue to secretly conspire against the Queen while being stalked by shadow creatures. Back on Earth, Bloom, Tecna and Flora try to keep a performance by Annabelle, Louise, and the other Winx girls from being sabotaged. They meet a woman named Venomya who is a music critic. After driving her away, the Winx are suddenly whisked away to the dream world where they are tasked to help the spirit of the world of dreams. They receive evolved powers called Onyrix. They aid Jim and Smee against the shadow creatures. Jim explains the background of his situation: he is Captain Hook and the world of dreams is called Neverland. There was a hero named Peter Pan who left the world and the Queen (Tinkerbell) was so heartbroken she created a world of darkness. The Winx return to Earth where track down Peter Pan's friend Wendy Darling, who now runs an orphanage in London. One of the shadow monsters absorbs some of Bloom's essence, which Tinkerbell fashions into a dark creature called Vertigo.

After finishing their joint tour with Annabelle and Louise, the Winx look over Peter's farewell letter to Wendy in which he asks her to look after their son Matt Barrie. In London, they look for Matt at the place where he worked, but he was fired. Meanwhile, Bloom is haunted repeatedly by illusions of a costumed woman named Vertigo. She is influenced to attack her friends, but is able to break free from the illusion and defeats Vertigo by accepting and embracing the dark parts of her self. But Tinkerbell is net yet done, as she calls forth the evil projection of Musa: Banshee.

The Spirit of the World of Dreams summons the Winx Club and tells them someone close to them is in imminent danger. The Winx split into two groups: Flora, Aisha and Tecna go to the dream world while Stella, Bloom and Musa continue searching for Matt. Flora, Aisha and Tecna encounter and try to fight off Crocodile Man who had been going after Jim and Smee. The fairies notice that Crocodile Man isn't really attacking back but fleeing and then waiting for them to follow. They eventually learn that Crocodile Man has been leading them to a lair where his brother Alligator had been imprisoned. But when they try to free up, they discover the prison is actually a living magical creature which ends up absorbing them into its sticky goo. Meanwhile, Bloom, Stella and Musa determine that Jim's constellation map points to landmarks in Paris, so they head there to the brightest landmark of the Cathedral of Notre Dame. Musa splits from the others and succeeds in finding Matt, but she is suddenly attacked by Banshee.

Aisha uses her water magic to free herself, Flora, Tecna, Crocodile Man, and Alligator Man. They tell Jim of their quest to bring back the Queen's light side as Tinker Bell by reuniting her with Peter Pan. Jim agrees, but has no knowledge of Pan's whereabouts either. Back in Paris, Musa is still being attacked by her nemesis Banshee. When Bloom and Stella arrive to support her. Musa realizes that the harmonious chimes of the bells of Notre Dame weaken Banshee, and she rings the bells to defeat Banshee. The Spirit of the World of Dreams summons the Winx and explains that three mermaids were enchanted by the Queen and have headed to Earth. The mermaids were found in Paris and have the ability to charm people.

The Winx split up again on two missions. Stella, Tecna and Aisha track down Matt to the fashion school, while Bloom, Flora and Musa try to free Hook's pirates from the shadow creature's traps. At the fashion school, Stella encounters her nemesis, Obscura, who traps her in a world of isolation and has her re-live her innermost fears of being alone and verbally bullied by everyone.

Bloom, Flora and Musa continue to battle the shadow creatures that have been holding Jim's pirate crew. Flora uses her plant powers to overwhelm the Queen's control of the area and the three Winx fairies then combine powers to free the pirates. Stella, Aisha and Tecna chase Matt's hooded abductor all over Paris. They are joined by the other Winx and the pirates, the last group at first just want to take it easy and rest, but later team up to help the Winx. When they tell Matt about their mission, Matt reveals that he has been looking for a girl of his dreams, but then Matt is suddenly teleported away.

In the world of dreams, the Queen is approached by Matt, who recognizes her from the stars and that he had been searching for her his whole life. Entranced by her beauty, he promises to find the loveliest of flowers as proof of his enduring love for her. Refusing to let her weakness get the better of her, the Queen calls Flora's inner nemesis, Stoney, using the non-living material of stone. Flora and Matt work together to defeat her nemesis Stoney by using her own dark magic against her. Matt thanks Flora for helping him and joins the Winx Club as a friend. However, Aisha refuses to have his "big ideas" around and storms off. From a distance, she is watched by one of the Queen's shadow monsters.

Despite Tiger Lily's visions of a heroic Matt, Aisha struggles with his warrior training, which is soon put to the test by the Queen's monsters.

After a battle with Aisha's innermost nemesis, Sinka, the Winx Club manage to reunite Matt and Wendy and go undercover to look for Peter Pan's mystical sword in the home of an art collector named Sebastian.

Tecna fights her inner nemesis, Virus, in the art vault. Armed with his father's mystical sword, a transformed Matt joins the Winx Club and Jim in the World of Dreams, ready to stand against the Queen.

As the Winx band deals with an onstage earthquake, Jim, Matt, and the pirate army try to beat back the shadow monsters and breach the Queen's wall.

Faced with Jim's betrayal, Matt tries to flee by boat, but is waylaid by the three mermaids. On Earth, the banished Winx Club fairies, along with Roxy, battle Jim's pirate army.

In the season finale, the Winx club fight along side Matt and Tinkerbell to foil the plans of Jim, better known as captain hook. Finally seeing the light, Tinkerbell reverts to her pure form and Matt winx the mermaids onto the side of the Winx. Jim turns the tree of life into a ship and begins to fly it to the world of nightmares to end all dreams forever. Luckily Smee ends up tackling Jim and moves the tree from damnation, unfortunately Jim falls from the ship and plummets into the portal of the world of Nightmares - never to be seen again.