In 1936, archaeologist Indiana Jones (or Indy), and Daring Do (who is an old friend of Indy) brave an ancient booby trapped temple in Peru and retrieves a golden idol. Upon fleeing the temple, Indy and Daring are confronted by rival archaeologist René Belloq and the indigenous Hovitos. Surrounded and outnumbered, Indy and Daring are forced to surrender the idol to Belloq. Indy and Daring then escape aboard a waiting Waco seaplane after being pursued.
Shortly after returning to Marshall College, where he teaches archaeology, Indy and Daring are interviewed by two Army intelligence agents. They inform them that the Nazis, in their quest for occult power, are searching for his old mentor, Abner Ravenwood, who is the leading expert on the ancient Egyptian city of Tanis and possesses the headpiece of the Staff of Ra. Indy deduces that the Nazis are searching for Tanis because it is believed to be the location of the Ark of the Covenant; the Nazis believe that if they acquire it, their armies will become invincible. The Staff of Ra, meanwhile, is the key to finding the Well of Souls, a secret chamber in which the Ark is buried.
The agents subsequently authorize Indy and Daring to recover the Ark before the Nazis. With help from Thomas, Percy, James, Toby, Emily, Gordon, Henry, Edward, Bash, Dash, Ferdinand, Luke, Charlie, Hiro, Victor, Kevin, Skarloey, Rheneas, Sir Handel, Peter Sam, Rusty, Duncan, Twilight Sparkle, Rarity, Rainbow Dash, Fluttershy, Applejack, Pinkie Pie, Spike, Apple Bloom, Sweetie Belle, Scootaloo, Shining Armor, Princess Cadence, Zecora, Stephen, Stuingtion's Engines, Rattlesnake Jake, (in which Jones is uncomfortable being around) and Dusty Crophopper. The group travels to Nepal, only to find that Ravenwood has died and that the headpiece is in the possession of his daughter, Marion, who is also Indy's embittered former lover. Indy offers to buy the headpiece for $3000, plus $2000 more when they return to the United States. Daring also offers a diamond. Marion's tavern is suddenly raided by a group of thugs commanded by Nazi agent Toht. The tavern is burned down in the ensuing fight, during which Toht burns his hand on the searing hot headpiece as he tries to grab it. Indy, Marion, Daring, Thomas, Twilight, and their friends escape with the headpiece, with Marion declaring she will accompany them in the search for the Ark so he can repay his debt. On the way, J.J. hands the team his bible so they can learn more about Ark, but only the CMC and Daring Do read the most out of it.
They travel to Cairo where they learn from Indy's friend Sallah, a skilled excavator, that Belloq and the Nazis, led by Colonel Dietrich, are currently digging for the Well of Souls with a replica of the headpiece modeled after the scar on Toht's hand. In a bazaar, Nazi operatives attempt to kidnap Marion and as Indy, Daring, Thomas, Twilight, and their friends chase after them it appears that she dies in an explosion. While deciphering the markings on the headpiece, Indy, Daring, and Sallah realize that the Nazis have miscalculated the location of the Well of Souls. Using this to their advantage, they infiltrate the Nazi dig and use the Staff of Ra to determine the location correctly and uncover the Well of Souls, which is filled with snakes. Indy and Daring fend off the snakes despite his ophidiophobia, with the team behind [despite Rarity's own ophidiophobia], and acquire the Ark. Inside the well, the team finds a picture of an engine that looks just like J.J. meaning that he’s related to Moses! Then some of the team gets into an argument with J.J. because they think the Ark is just some more treasure which J.J. knows isn’t true because he’s Jewish. But then Belloq, Dietrich, and the Nazis arrive to take the Ark. They toss Marion into the well with Indy, Daring, Thomas, Twilight, and their friends and seal them in, but they manage to escape. After a fistfight with a Nazi mechanic, blowing up a flying wing on the airstrip, and chasing down a convoy of trucks, Indy, Daring, and the others take back the Ark before it can be shipped to Berlin.
Indy and Marion leave Cairo to escort the Ark to England on board a tramp steamer. The next morning, their boat is boarded by Belloq, Dietrich, and the Nazis, who once again steal the Ark and kidnap Marion. But before they take Daring, Thomas, Twi, and their friends, J.J. makes a deal with Dietrich to let them go in exchange for him, revealing that he’s related to Moses. Indy stows away on their U-boat while the team builds a raft out of crates and barrels and then follows them to an isolated island in the Aegean Sea where Belloq plans to test the power of the Ark before presenting it to Hitler. Indy reveals himself and threatens to destroy the Ark with a bazooka, but Belloq calls his bluff, knowing Indy cannot bear to destroy such an important historical artifact.
Indy surrenders and is tied to a post with Marion while the team's put into a crystal box as Belloq performs a ceremonial opening of the Ark, (With J.J. reluctantly helping) which appears to contain nothing but sand. Suddenly, spirits resembling Old Testament Seraphim emerge from the Ark. Aware of the supernatural danger of looking at the opened Ark, Indy warns Marion to close her eyes. Meanwhile, the apparitions suddenly morph into "angels of death", and all of the Nazi soldiers, along with Belloq and Toht, are gruesomely killed. After the Ark's power's released, Twi and her friends are left speechless by God's power and then apologize to J.J. for not listening to him.
In Washington, D.C., the Army intelligence agents tell a suspicious Indy, Daring, and Brody that the Ark "is someplace safe" to be studied by "top men". The Ark is permanently stored in a giant government warehouse amongst countless similar crates.
- Daring Do, Zecora, Stephen, Steamy, Puffy, Evan, Shai-Shay, Sharky, Willy (the train), Mako, Rattlesnake Jake, The Miner Trains (Steam Grindor, Steam Mech, Mucker, Steam Claw D., Steam Driller, Steam Sweeper and Steam Exavator), T.C., Hugs, Buzz, J.J., Socky, Skunky, 1206, The Planet Trains (Zip, Dazzlen, Dusten, Gustis, Rings, Uray, Tune and Shiver), and Dusty Crophopper will guest star in this fim.
- It's revealed that J.J. is Jewish and related to Moses.
- The Storyline continues in Thomas and Twilight Sparkle's Adventures with Indiana Jones and The Last Crusade.