Sir Topham Hatt, the director of the Island of Sodor Railway, is on holiday leaving Mr. Conductor (Alec Baldwin) in charge. Meanwhile, while talking at Maithwaite station, Thomas (voiced by John Bellis/Eddie Glen) and Gordon (voiced by Neil Crone) encounter an evil and cross diesel locomotive named Diesel 10 (voiced by Keith Scott/Neil Crone), who has a claw on top of him who he names "Pinchy." He states he has incomplete work on Sodor. Meanwhile in Shining Time, Mr. Conductor has his own problems as his supply of gold dust, which allows him to magically teleport from place to place, is running low and isn't enough to allow him to travel back from Sodor.
Later that day, while Thomas and James (voiced by Michael Angelis/Susan Roman) are at Tidmouth Sheds, Diesel 10 arrives and announces his evil plan to get rid of the steam engines on Sodor once and for all since he had hated them for some reason. Thomas leaves to collect Mr. Conductor, who is now running late and is worried that the journey from Shining Time to Sodor has been getting bumpier and bumpier since 'the lost engine' vanished. Unknown to Mr. Conductor, the 'lost engine', named Lady (voiced by Britt Allcroft), is hidden in a workshop on Muffle Mountain above Shining Time. Lady's aging guardian, Burnett Stone (Peter Fonda), has kept her hidden after Diesel 10's last attempt to destroy her. Despite having rebuilt Lady, Burnett was unable to steam her despite using different types of coal. At night, Diesel 10 attacks the shed where the steam engines are sleeping, but Mr. Conductor repels him with sugar after his gold dust fails him and Diesel 10 quickly retreats.
While talking at Knapford Station, Percy (voiced by Michael Angelis/Linda Ballantyne) and Thomas conclude that there is a secret railway between Sodor and Shining Time. Diesel 10 overhears them and goes to the Sodor Ironworks to tell his hench-trains, Splatter (voiced by Patrick Breen/Neil Crone) and Dodge (voiced by Patrick Breen/Kevin Frank), of his plans to destroy the lost engine and the other steam engines on Sodor which Mr. Conductor, whose gold dust is running out, won't be able to stop. Toby (voiced by Colm Feore) follows Diesel 10 and overhears his plans of destroying the steam engines. He rings his bell to distract him, causing Diesel 10 to knock the roof of the shed where he, Splatter, and Dodge are in.
Lily Stone (Mara Wilson), Burnett's granddaughter, is being sent from a big city to visit Burnett on Muffle Mountain. While at the railway station, she meets a dog named Mutt who puts her on the Rainbow Sun, a steam train which goes to Shining Time, instead of the right train. On arriving at Shining Time, she meets Mr. Conductor's lazy cousin Junior (Michael E. Rodgers) and station manager Stacy Jones (Didi Conn) who takes her to Burnett's house. The next day, Lily meets Patch (Cody McMains), who has been helping Burnett look after Lady and takes her on a horse ride to Shining Time where she meets Junior again. Junior takes her through the Magic Railroad to Sodor where they meet Thomas.
Thomas, who has been looking for Mr. Conductor, isn't happy to see Junior but agrees to help Lily and Junior and takes them to the windmill where they find Mr. Conductor, who had been captured by Diesel 10 while looking for more gold dust only to be flung to the windmill after breaking a hose on 10's claw. Junior climbs onto one of the windmill sails and ends up being thrown onto Diesel 10's roof; later that night, Percy finds Splatter and Dodge have located the Sodor entrance to the Magic Railroad in a grotto at the end of an old siding and goes to warn Mr. Conductor, Lily and Thomas.
Thomas agrees to take Lily home to Shining Time and sets off. While travelling through the Magic Railroad, Thomas discovers a missing truck of special Sodor coal, which he collects and arrives at the other end of the Magic Railroad, high on a cliff near the summit of Muffle Mountain. Lily goes to find Burnett, leaving Thomas stranded on the mountain; the wind suddenly picks up and Thomas' coupling comes loose from the truck, causing him to roll down the mountain and into a field where he re-enters the Magic Railroad through another secret portal.
Lily finds Burnett in his workshop, where he shows her Lady and explains his problem in getting her to steam. Lily suggests using Sodor coal; Patch goes back to retrieve the truck and Burnett uses the coal to fire Lady up. Now able to steam, Burnett, Lily, Patch and Mutt take Lady back along the Magic Railroad, regenerating both Lady and the railroad in the process. Lady comments that Burnett had never forgotten about Magic; Thomas then arrives and the two engines return to Sodor where they meet Mr. Conductor and Junior, who had used the last of his gold dust to rescue both himself and James from Diesel 10 at the Ironworks just as he was about to kill them both by pushing them into the big furnace from behind.
Diesel 10 arrives with Splatter and Dodge, who finally decide to stop helping him. Thomas and Lady, driven by Burnett, flee from Diesel 10, chasing them towards a crumbling viaduct. Although Thomas and Lady make it safely across, Diesel 10 falls off the bridge after one of the arches collapses and plunges into a barge where he is carried away, but leaving his fate unknown. Later that evening, Thomas, Lady, Burnett and Lily meet Mr. Conductor and Junior again at the grotto. Lily combines water from a wishing well and shavings from the Magic Railroad to make more gold dust, saving Sodor and Shining Time. Junior decides to go to work and Mr. Conductor gives him his own cap before sending him to another railway, before leaving himself to welcome Sir Topham Hatt home. Lily, Burnett, Patch and Mutt return to Shining Time, while Thomas happily steams back to Tidmouth to tell the other engines about his encounter with Lady.
- Part 1: https://plus.google.com/u/0/photos/100340475245531121196/album/6443379923580728593/6443379922644830370?authkey=COGDrY_3xcT9RQ
- Part 2: https://plus.google.com/u/0/photos/100340475245531121196/album/6443379923580728593/6443379923896400338?authkey=COGDrY_3xcT9RQ
- Part 3: https://plus.google.com/u/0/photos/100340475245531121196/album/6443379923580728593/6443379920747374642?authkey=COGDrY_3xcT9RQ
- Part 4: https://plus.google.com/u/0/photos/100340475245531121196/album/6443379923580728593/6443379923308791586?authkey=COGDrY_3xcT9RQ
- Part 5: https://plus.google.com/u/0/photos/100340475245531121196/album/6443379923580728593/6443379920579166690?authkey=COGDrY_3xcT9RQ
- Part 6: https://plus.google.com/u/0/photos/100340475245531121196/album/6443379923580728593/6443379922117938242?authkey=COGDrY_3xcT9RQ
- Part 7: https://plus.google.com/u/0/photos/100340475245531121196/album/6443379923580728593/6443379920315357890?authkey=COGDrY_3xcT9RQ