As Easter approaches, the dejected Guardians gather in Bunnymund's home. With the unexpected aid of Jamie's little sister, Sophie, they begin the process of painting eggs for the coming morning.

After Jack takes Sophie home, he is lured to Pitch's lair by a voice. While there, Pitch taunts him with his memories and fears of not being believed in. This distracted Jack long enough for the nightmares to destroy all the Easter eggs, ruining Easter and causing children to stop believing in Bunnymund.

After losing his trust in the disappointed Guardians, Jack isolates himself in Antarctica, where Pitch tries to convince Jack to join his side. When Jack refuses, Pitch threatens to kill Baby Tooth, unless Jack gives him his staff. Jack agrees, but Pitch breaks Jack's staff and throws him off a chasm. Jack unlocks his memories and he remembers that he was a mortal human boy who fell into a frozen pond while saving his younger sister from falling through. This memory inspires Jack and he fixes his staff and returns to Pitch's lair to rescue the kidnapped baby fairies.

Due to Pitch's powers, all the world's children's beliefs in the Guardians fade, except Jamie's. When Jack finds even Jamie's faith in them is wavering, Jack causes it to snow in his room and makes him realize that Jack Frost exists. Jack is finally seen and heard after centuries.

And while the weakened Guardians face Pitch in battle, Jack and Jamie gather Jamie's friends, whose renewed belief bolsters their fight against Pitch as well. Pitch tries to terrify the children with his nightmares.

But their dreams prove even stronger, resulting in Sandy's resurrection. Defeated and no longer feared, Pitch tries to retreat, but his own nightmares turn against him due to his own fear and drag him under the desolate bed into his own world.

Afterward, Jamie and his friends bid goodbye to the Guardians as Jack accepts his place among them as the Guardian of Fun.