The second of Trier’s films known collectively as the Europa trilogy. The other two films in the trilogy are The Element of Crime (1984) and Europa (1991). Co-written by Niels Vørsel, the film focuses on the screenwriting process. Vørsel and von Trier play themselves, coming up with a last-minute script for a producer. This story is intercut with scenes from the film they write, in which von Trier plays a renegade doctor trying to cure a modern-day epidemic. In an ironic twist, the doctor discovers that he himself has been spreading the virus.

Once again, Bastian is transported to the world of Fantasia which he recently managed to save from destruction. However, the land is now being destroyed by an evil sorceress, Xayide, so he must join up with Atreyu and face the Emptiness once more.