Lulu's favourite toy is a bubble blower. She blows bubbles and the Wind takes them away. Wanting to know what happens to the bubbles, Lulu one day decides to follow the Wind to the Island of the Palms where he lives. She enters a floating fairy palace and is made a Fairy Queen. The fairy palace travels through the path of stars, the bridge of the rainbow, the highway of the clouds and the street of fire until it reaches the land of the Palms where the red suns sink to sleep. She is greeted by the Wind and welcomed with glee by his children. The palace of light disappears and she stays with the Wind in the land of the palms, but begins to miss home. Lulu is told that no one leaves the land of the palms; however, a magician takes her away in an eagle-drawn chariot to his castle, where he puts a spell on her and keeps her captive as she sleeps.
A young boy called Bubbles, who is Lulu's friend, makes a plan to rescue her and procures a clay pipe and mug to blow bubbles with, in the chance of speaking to the fairies. He thinks that they could take him to Lulu in the Island of the Magician. When his plan fails, he throws away the pipe, but keeps crumbs in the mug for the birds. He finds a lean and hungry cat and gives it some milk. Because of Bubbles's kindness, the cat transforms back into being a princess, her original form. The grateful princess helps Bubbles to the Island beyond the Night. She tells Bubbles that if he wants to rescue Lulu, he must climb the mountain, go through the Wood of Animals and find the Old Grey Man of the Sea who will give him the next instructions. She also hands him a magic stone that he can kiss if he is in danger. Bubbles has many adventures, including attending a Bunyip's Ball, and meets many dangers and challenges along the way. Eventually he makes it to the Magician's Castle and manages to rescue Lulu and, with the help of a golden chariot pulled by doves, Bubbles and Lulu make their way home.
