Bastian finds himself hovering in the air with Moon Child. She explains that this is the beginning of Fantastica, and that the magical world will be reborn from Bastian’s wishes. With his first wish, Bastian is able to see the Empress, who presents him with a grain of sand—all that is left of Fantastica. With his next wishes, Bastian plants a seed, and a forest grows with luminous and colorful blossoms and leaves. Bastian also realizes that he has a new body—one that is handsome and slender rather than plump and awkward. Presenting Bastian with AURYN, the Empress explains that the emblem will allow him to do what he wishes and that as long as he wears it, he will be her representative in Fantastica.

With the Empress gone, Bastian sets about creating the Perilin, the Night Forest. He is happy to have a beautiful body but begins to assume that he has always been handsome. Indeed, each wish causes Bastian to lose his memories of the past, one by one. The loss of his memories does not yet impact his happiness, though, and Bastian climbs and runs through the forest with unadulterated joy.