Aang wakes up in the spirit world. He begins conversing with Roku, who recommends he contact the moon and ocean spirit for help in this time of trouble. However, Roku has had no interaction with them, and only knows that they choose to descend from the spirit world, but he has no knowledge of their identity, other than that they were called push and pull, yin and yang… and they are in grave danger.
In this time, Katara and Zuko have been dueling. Katara has the upper hand as the full moon strengthens her. However, as the sun breaks through, Zuko, being more experienced, ferociously attacks Katara, knocking her unconscious. Zuko lifts Aang up and begins to move to the planned rendezvous point with Iroh. Iroh, however, has been closely watching Zhou and his attacks. Iroh realises Zhou is too calm for someone who isn’t making progress to break through the Water Tribe’s defences.
Sokka is in the military room, helping devise strategies to combat the attack. Yue is with them, and just as involved. Both offer up some great plans, when Katara rushes in saying Aang was kidnapped by Zuko. The three rush to Appa and try to find Zuko. Zuko has found a place to hide out, but Aang has come out of the spirit world. The two converse briefly, ending with Aang throwing some insults at Zuko. Zuko, enraged now, begins throwing fire at Aang, setting the tower on fire. Aang air kicks him out the window and lets the fire cut his bindings. Aang runs back to the Northern Water Tribe when he sees Appa. Aang jumps up and gets on Appa’s back with Sokka. “I know where they are, but we need to get there now. Roku thinks they’re in danger.” “This spirit world stuff is confusing, how can spirits be in danger?” Sokka asks. “I don’t know, I just know Roku doesn’t trust the fire nation to keep balance.”
As the team arrives, Zhou is there with a battalion of fire benders. A fight immediately breaks out, and Zhou rushes to the fish in the pool. Aang and Zhou brawl, but Aang is over run by other fire benders. Zhou grabs one of the fish, and Katara immediately loses her bending. Suddenly, fire bursts from behind him, and all of Zhou’s men are taken out. Iroh stands ready to fight. Zuko looks on as his uncle stands against Zhou. Amazed, he begins moving closer to join Iroh. “This is not right, you are disrupting the balance of life. If you do this, I will have to destroy you.” Zhou, now terrified, kills the fish in defiance. Iroh runs at Zhou, who drops the fish and runs away. Zuko follows after them.
Aang and the team are left defeated, the water benders retreat as they are now defenceless. As they discuss what to do, Aang looks at the other fish. “It’s hopeless” Yue cries. Sokka goes to comfort her. Katara looks at Aang, who drops to his knees in the water. “Aang, what should we…” Katara is interrupted as Aang’s arrows and eyes glow. “There’s still hope…” Water rushes over Aang and launches high into the air as the water around him begins to glow an eerie blue. Aang moves to attack the fire nation fleet, taking out tanks and other fire benders along the way.
Iroh and Zuko catch up to Zhou, and as they begin to fight, Aang goes past them, reaches out and Zhou disappears into a glow of water. Aang pushes back the fleet, and the fire nation retreats. As Aang returns to the meditation pool, there is a sense of loss. A minor victory for now. Yue looks at Sokka, and like in the show, explains how the moon spirit gave her life, and now it was time to return the favour. Sokka, at a loss for words, tries to find another way. Yue has made up her mind, and becomes one with the moon spirit.
The chief arrives just in time to see this and say goodbye. The movie ends with the rebuilding of the Northern Water Tribe and Aang and Katara furthering their training. Sokka has now devoted himself to learning to be a better warrior, and we see less of his humour now. Iroh and Zuko have stowed away on a fire nation ship and make a break for the earth kingdom, realising now they are fugitives and want nothing to do with the fire nation.
As we close, we see a woman, Azula, board a ship, holding wanted posters of Zuko and Iroh.