Five children discover from Shen the Dragon that they are spirit warriors, on a quest to find twelve spirit pieces - if they fail, the evil Li will find them and then control the universe!

The warriors head into Li's own realm of fire and quickly discover their next spirit piece in a poor woman's rubbish. However, before they leave they are persuaded by her to head to a nearby peach tree, which grants wishes. There each of the warriors eats a peach and agrees to make a wish to find the final spirit piece - but not all of the warriors keep their word.

Meanwhile Li, losing patience with Hwang, unleashes a dreadful phenomenon and pursues the warriors, determined to steal all of their spirit pieces, and in a world of fire there is no water, so not even Shen can help them.