As Falkor and Atreyu search for the borders of Fantastica, Atreyu is flung from Falkor's back in a confrontation with the four Wind Giants and loses AURYN in the sea. Through reading the story, Bastian becomes increasingly disturbed by hints that the characters are somehow aware that he is reading their adventures, being able to hear or even see him at points. By Uyulala, he is told the only thing that can save the Empress is a new name given to her by a human, who can only be found beyond Fantastica's borders. In reaching her, he is aided by a luckdragon named Falkor, whom he rescues from the shapeshifting creature Ygramul the Many.

At the advice of the giant turtle Morla the Aged One, Atreyu sets off in search of an invisible oracle known as Uyulala, who may know the Empress's cure. Upon finding Atreyu, Cairon gives him AURYN: a powerful amulet that protects him from all harm. The delegates are shocked when the Empress's physician, a centaur named Cairon, informs them that the Empress is ill, and has chosen a boy warrior named Atreyu to find a cure. A great delegation has come to the Empress to seek her help against a formless entity called 'The Nothing'. The story Bastian reads is set in the magical land of Fantastica, a place of wonder ruled by the benevolent and mysterious Childlike Empress. Unable to resist, he steals the book and hides in his school's attic, where he begins to read.

While escaping from some bullies, Bastian bursts into the antiquarian book store of Carl Conrad Coreander, where he finds his interest held by a book called The Neverending Story. The book centres on a boy, Bastian Balthazar Bux, an overweight and imaginative child who is neglected by his father after the death of Bastian's mother. The first English translation, by Ralph Manheim, was published in 1983. The Neverending Story ( German: Die unendliche Geschichte) is a fantasy novel by German writer Michael Ende, published in 1979.

The Neverending Story by Michael Ende