Two siblings, Max and Emmy, find an enchanted dragon scale capable of transporting them to a whimsical fantasy land inhabited by colorful anthropomorphic dragons by reciting a rhyme. They befriend four friendly dragons Cassie, Ord, Zak, Wheezie and Quetzal.
The carnival has come to Dragon Land but the dragons are sleepy and cannot be very active since Ord has invited them for a sleepover at his house and he has a terrible nightmare which gives him trouble with his sleeping, causing everyone else to stay awake all night.
Quetzal and the dragons ask Max and Emmy to recolor a black-and-white Dragon Land when all color was washed out by a storm. However, Max thinks coloring within the lines is more difficult than he expects.
Ord is afraid that he lost his father's favorite Whack-It-Back Whistler forever, until Norm the Number Gnome knows where it is and shows everyone how counting to ten will help them find it.
A concert is coming up in Singing Springs, but Emmy accidentally breaks Wheezie's trumpet and is too afraid to tell what she did. Wheezie does blame Zak and later Cassie for breaking it though, making them feel bad.
Zak wants the rare Jugglebug for show and tell, but Wheezie is so noisy, she scares it away. With Max and Emmy's help the dragons find that working together gets the job done.
Wheezie gets a new pet Hairball named Slurpy and learns how to take care of him. However, after getting carried away with too many dragon berries swallowed whole, Slurpy ends up with a bad stomachache. Luckily, Quetzal advises them that hairballs like their dragon berries mashed.
