A hostile alien species has discovered a way to invade the dreams of humanity. The alien's plan is to take the place of the nightmare creatures that usually plague man's dreams, then destroy the sleeper from within their own dreams. In the Dream Dome, the Sandman bids farewell to his nightmarish associates, Brute and Glob. The pair are taking a holiday to visit relatives in the Dream Stream. Their idyllic reunion, however, is disrupted by the alien's swan-craft, which quickly fill the skies of the Dream Stream. The aliens imprison Brute, Glob, and the rest of their nightmarish brethren beneath a transparent energy dome. An alien landing party raids the mountain sanctuary of the NIghtmare Wizard, and take him captive. In the waking world, young Jed Walker is showing his Grandfather, Ezra Paulson, several tricks he's learned to do with a yo-yo. Living in isolation on Dolphin Island, with just his Grandfather for companionship, the lonely boy breaks down. Comforted by his Grandfather, Walker retires to bed. Monitoring Walker's dreams from the Dream Dome, the Sandman is perplexed by the strange flock of birds flying through Walker's mind. Upon closer scrutiny, the Sandman discovers that the birds are actually alien ships. The aliens prepare to detonate an ionic fission bomb in Walker's dream, to test the viability of their conquest of the Earth from within dreams. The Sandman broadcasts a signal to awaken Walker, saving him from the alien's attack.
The Sandman enters the Dream Stream to investigate the matter further. He soon discovers the NIghtmare Wizard, bound, on the floor of his own home. With his focus on freeing the Nightmare Wizard, the Sandman is ambushed. The Sandman awakens, tied up next to the NIghtmare Wizard. With their sole remaining obstacle dealt with, the aliens prepare to launch a full scale assault on humanity from their dreams. Positioning himself back-to-back with the Nightmare Wizard, the Sandman instructs him to remove the hypnosonic whistle hidden in the Sandman's glove. Blowing the whistle awakens Walker, while also relaying a distress call to the boy to come rescue them. Walker rides the sonic vibrations of the hypnosonic whistle into the Dream Stream. Given safe passage through the Fantasy Forest by the NIghtmare Wizard, Walker makes his way to the two captives and sets about freeing the Sandman. Before he can do so, the alien general, Quark, returns, and holds Walker at gunpoint. Spying a weapon on Walker's belt, Quarks demands it be handed over to him. Walker's "weapon" is merely the toy yo-yo. To demonstrate it's utter harmlessness, Walker begins doing tricks with the yo-yo. Walker's final trick is to beat the alien down with the yo-yo. With Walker and the NIghtmare Wizard at his side, the Sandman races to release the nightmare inhabitants of the Dream Stream. An epic engagement ensues, as the Sandman's army of nightmare's go to war with the alien invaders. At last the aliens are routed. Walker is returned to the waking world, where his night passes peacefully with pleasant dreams.