The story begins with Master Eon introducing the player to the world of Skylands as well as its protectors, the Skylanders. The veteran Portal Master then reveals the backstory of a special group of Skylanders known as the SWAP Force, who protected the Cloudbreak Islands and its magical volcano that regenerates the magic in all of Skylands every one hundred years. During an epic battle against a swarm of Fire Vipers summoned by a dark figure, the SWAP Force were caught in the eruption of the magic volcano, which granted them the ability to swap halves, but in the process banished them to Earth.

In the present, Flynn is on vacation at the Cloudbreak Islands to see its next one hundredth eruption. He is encountered by Tessa, a fox girl riding on a large bird named Whiskers, and thrust into another adventure when Kaos ordered a group of Greebles to attack Tessa's village before the volcano celebration...

The heroes manage to take refuge in Woodburrow, but when they arrive, Rufus informs them that the Chieftess has been kidnapped by Evilized Greebles and held in Cascade Glade with the Gillman and Yeti Councillors. It is revealed that Kaos is the one leading the greebles, and decides to test out his new creation on them: The Evilizer, which uses petrified darkness to turn anything into an evil, purple crystal-covered version of itself with great power.

Flynn and Tessa make their way to where the chieftess is, and the Skylanders rescue her and bring her back to the village. However, Kaos has learned of the whereabouts of the Elementals' locations. He plans to evilize one of them, which will cause Mount Cloudbreak to turn evil and spread the darkness all across Skylands.