The movie starts off with Sakura on her Clow staff being chased by several arrows, which are being shot by the Arrow card. Quickly, Sakura dodges all of the arrows that come flying towards her. With a little help from Syaoran, Sakura defeats the Arrows card by using Windy.

Late at night whilst it is raining, the Clow book starts to glow. Sakura is sleeping and she has a dream that she is in a strange place surrounded by water, debris and the remnants of a building with light, flooding in from the skylights. From the water below Sakura, white ribbons appear from the water and rap themselves around Sakura, pulling her into the water. Surprisingly, Sakura can breathe underwater and when the ribbons start to escape her grip, she attempts to grab one of the ribbons. A voice repeatedly tells her "water is a thing that flows". Sakura wakes up only to find out it was a dream.

Later, in School, Sakura and her classmates are all receiving their reports before the winter holiday. Sakura receives the grades she wanted although she does say that she thinks that her maths grade had fallen. Tomoyo has the same excellent grades as she did in the first term. Syaoran looks really nervous when he is about to receive his report but Meiling says that it is all right because she is with him. When she goes to receive her report, she shouts, "How?" wondering why she didn't get high grades. Syaoran on the other hand, quickly scuttles back to his seat and scans quickly through his report card finally saying that he can show it to his mother but he quickly closes his report because he notices that Sakura is looking at it.

Later on in the day, Sakura and Tomoyo go to the Twin Bells to buy a notebook. The owner of the Twin bells asks them to draw a ball from a box with a slot in it, to win the grand prize of a trip to Hong Kong. Tomoyo wishes Sakura good luck as she goes to pick out a ball. As she attempts to get a ball, her arm is too short and she is unable to reach any of the balls although magically a ball lands in her hand which surprises her. Sakura shows the ball to the shop owner and says, "I guess I got a small prize too." As the shop keeper goes to check the wall chart with all the prizes on she mutters, "the sp..." which Tomoyo and Sakura both mutter as well and Sakura finds out that she has won the special prize of a trip to Hong Kong for 5 days and 4 nights.

Sakura arrives home and shows Kero her special prize and praises her for winning it. Sakura is very happy since she has never gone overseas before and Kero starts telling her that he once went to Hong Kong with Clow Reed. Sakura asks Kero, "..these Clow cards have also been to Hong Kong?" in which he replies that the Clow Cards were made by Clow Reed so of course they would have gone to Hong Kong along with Clow Reed.

Sakura tells her father about the prize and he tells that it would be a shame to waste it so she can go to Hong Kong provided that Toya goes with her. Sakura knows that Toya has his part time jobs to go to so he might not be able to go although Toya agrees to go with her, provided that she does 5 chores. Since Sakura won a ticket for 4, she decides that Tomoyo, Toya and Yukito will go with her.

When arriving at the Airport, Sakura tells Tomoyo that she has never been on a plane before but Sakura is still surprised that Tomoyo brought her video camera with her. Tomoyo replies that she wants to film "Sakura in Hong Kong" and that she would never miss a great filming opportunity like this and she always brought a costume along so that she could film Sakura in it. Toya tells them that it is time to board and Toya teases Sakura by telling her that she needs to take her shoes off before going on an aeroplane although the air hostess tells her that she can step in the aeroplane as she is. As Sakura is about to tell her brother off, Kero pops out of her little bag leading to more embarrassment.

After getting off the plane, Sakura and Tomoyo are shown to their room in the Hotel. Sakura makes herself at home. When she puts her bag down she realises that she left Kero in there although when Kero looks out the window, he says, "where are we?" obviously not familiar with the new modern Hong Kong.

Sakura, Tomoyo, Kero, Yukito and Toya all go on a ferry ride to Hong Kong Island and Toya seems to tease Sakura throughout the trip whilst Tomoyo is constantly filming Sakura. As Sakura is leaning out of the Ferry, Toya warns her that if she learns out too far, a shark will eat her. When she asks how he knows, he replies saying he read it in the guidebook.

When in Hong Kong, Kero comments that it has really changed when Sakura and Tomoyo are having some Ice Cream. Kero also mentions that the presence is the same and that the presence of magic still remains. As Sakura and Tomoyo are thinking about what Kero has just said, Kero stuffs his face with Sakura's Ice cream. Kero starts to wonder how Sakura won the special prize as she normally has bad luck with lotteries in which, Kero mentions that Clow said that there is no coincidence in the world and that she might have been brought to Hong Kong.

Again Sakura arrives in the same dream where she is in the water room. Sakura realises that she is in the same place again, although this time she notices 2 white birds above her. After seeing them, she turns around, to see a silhouette of a woman. As she wonders who it is, the ribbons that appeared in the earlier dream, approach her. She puts out her hand to reach for one of the ribbons, but she wakes up immediately before grabbing the ribbon. When Sakura wakes up she starts to think about the dream and wonders who the woman is.

At Breakfast, Yukito orders a mountain of food and as Sakura lifts up one of the dishes, she notices that Kero is hidden in one of the dishes, which leads her to put the dish down and tells Toya that she wants to try another dish. Toya asks Sakura for the dish that she has put down as he want sot annoy her and as she picks up the dish to give to Toya, she notices that Kero is nowhere to be found, until she notices that he is under the dish she is passing to Toya. She changes her mind and decides to keep the dish.

Toya, Yukito, Tomoyo and Sakura all hit the town and go to the Bird Street where Sakura is thrilled with the amount of birds there. Kero tells Tomoyo that Bird Street hasn't changed at all when suddenly, Sakura feels a strange presence and instantly turns around. She tells Kero that she felt like she was being watched and She then asks Kero if there are Clow Cards in Hong Kong, in which he tells her that it is a different presence and he says that it seems like an evil presence. Yukito points out that there are some birds above Sakura and Tomoyo. As Sakura looks at them she realises that they are the same birds as the ones she saw in her dream. Sakura and Tomoyo both start to chase after the birds but when they disappear, Sakura decides to head down an alleyway to use the Clow cards to find the birds.

She jumps high above Hong Kong and when she caught sight of the birds, she follows them. She locates them just above an old well. When looking into the well, she notices the woman from her dreams and the woman hypnotises Sakura so that she will be drawn into the well although Syaoran interrupts Sakura and everything returns to normal. Sakura is surprised to see Syaoran there and when she turns around she falls into the well. Tomoyo is still trying to find out where Sakura went when she bumps into Meiling. Meiling realises it is Tomoyo when she hears her speaking Japanese. Just after meeting, Sakura and Syaoran walk back to meet Tomoyo. Toya asks Sakura where she has been but she just tells him that she fell in a puddle whereas Syaoran is trying to run away from Meiling since he is blushing after seeing Yukito.

Syaoran takes the group to his house where Sakura and Tomoyo get dress in Chinese Clothes after the incident with the well. All of a sudden, all of Syaoran’s Sisters come into the room to welcome them and the sisters all start saying how cute Tomoyo and Sakura are in the outfits. As soon as Yukito and Toya come into the Room, Syaoran’s sisters jump onto them and start stroking them as well. Syaoran enters the room and Sakura asks whether they are his sisters. He replies saying that they are but he doesn't look too happy about it. When Syaoran's mother enters the room, Syaoran stands upright. Sakura is so amazed by the beauty of the lady that she is dazed, although she doesn't know that it is Syaoran’s mother so when she finds out who she is, Sakura is really stunned. When Kero says a rude statement about Syaoran’s mother, Sakura gets really angry and Kero decides to hide himself in Sakura's Bag. Syaoran's mother comes to greet Sakura and she senses that Sakura has great powers and is in possession of the Clow cards. She also demands that Sakura, Tomoyo, Toya and Yukito will stay the night.

Later on in the night, Sakura, Tomoyo and Kero are all discussing about Syaoran’s Mother and about the power that Clow Reed had. At night, Sakura can't seem to get any sleep but when Sakura finally manages to get some sleep, she has the water dream again. Although this time she keeps asking the woman who she is? As she reaches out for one of the ribbons again, she catches one and the woman says "I've been waiting for you forever." As soon as she says this, the ribbon raps around Sakura's wrist and pull Sakura towards the woman. The woman starts to approach her but Sakura wakes up before anything else happens. When she wakes up, Kero and Tomoyo are there wondering if she is alright. Sakura then looks at her wrist to find that there is a red mark where the ribbons had been and Kero tells her that it was no ordinary dream.

Syaoran’s Mother enters Sakura and Tomoyo’s room and takes Sakura outside. Syaoran's Mother says an incantation that brings up an image of the Lasin board beneath Sakura. Syaoran's Mother finds out that the woman in Sakura’s Dreams beckoned Sakura to Hong Kong and Syaoran’s mother warns Sakura to be careful since a danger far worse than anything Sakura has ever experienced is about to happen.

The next day, Sakura, Tomoyo, Yukito and Toya all get ready to leave to go sightseeing with the Meiling and Syaoran. Sakura and Syaoran both sense a strange presence when at a shop and when they look at an overhead wire, they notice the 2 white birds. Just as soon as they notice the birds, Sakura and Syaoran start running after them and Yukito, Tomoyo, Meiling and Toya all start to follow them.

Sakura finds a dead end and uses the jump card to jump over the fence to a little courtyard. When in the courtyard, Sakura tells Kero that he can come out of her bag and he tells Sakura that he sense Evil, really powerful evil. The 2 birds suddenly shoot into one of the buildings and Sakura asks Kero whether the birds want her to go into the building. Kero replies saying that it looks like it. As she enters the building, she is very cautious and Kero scans the place to check if anyone is in the building. Sakura hears water and Kero can hear it too. They notice where the sound of water is coming from and approach the table with a book on top. On the book, Sakura notices the woman on the front of the cover is from her dreams. Suddenly the head of the lady on the front cover of the book moves and faces Sakura, hypnotising her so that she opens the book. Kero is tries to stop Sakura from opening the book but Toya, Yukito and Syaoran all burst into the room and when Toya asks where Sakura has been, Sakura slowly turns around and all of them see that Sakura isn't Sakura. Suddenly, she opens the book and Toya runs up to her and asks Sakura what is wrong with her. This causes Sakura to drop the book releasing water into the whole room.

When everyone is submerged under the water, Sakura opens her eyes to realise that nobody is around. It is at this moment that the place she was in starts to disappear and she finds herself in a different place. When she surfaces, she realises that she is in the realm where the mysterious woman in her dreams lives. Kero comes out of her bag and he tells her that she has finally returned to her senses. Sakura tells him that she is in her dream but a mysterious voice tells her that "this is no dream." The mysterious woman reveals herself and says, "why aren't you him?" and asks, "why did a little brat like you come here?" The woman gets extremely angry although Sakura does not know what the woman is on about. Water starts to rapidly fill up the area around Sakura. Kero tells Sakura to do something so Sakura uses the fly card. The woman doesn't understand why Sakura has the Clow cards and she starts attacking Sakura. Sakura is almost about to get hit but Syaoran comes on the scene and uses the freeze card to freeze the water.

Sakura says that she has to find Yukito, Toya and Tomoyo but the mysterious woman tells Syaoran and Sakura that they don't need to look since all of their friends are in small little bubbles and are held captive. The woman tells them that she called for Clow Reed and not Sakura and Syaoran and Kero whispers saying that he has seen this woman before. Syaoran uses the storm card to try and defeat the lady by surrounding her with a tornado. Meanwhile, Sakura uses the Sword card to try and burst the bubbles in which all her friends are being held captive. Sakura uses the sword card to open Tomoyo's bubble and rescue her with a little help from Kero and she uses the fly card to take Tomoyo out to safety. The storm cards effect starts to weaken as the woman starts to rip up the tornado and flood the area in which Syaoran is. Sakura goes to rescue Syaoran but Syaoran tells Sakura to "RUN" but Sakura is insistent in rescuing Syaoran. Syaoran tells Sakura that the ladies magic is weaker above her although Syaoran is quickly silenced by the lady before he can say anymore and is trapped in a bubbles just like Meiling, Toya and Yukito are. Kero tells Sakura that they have to get out of here since it is their only option otherwise they will also be captured, so Sakura quickly picks up Tomoyo and heads for the exit above.

Sakura, Tomoyo and Kero all return back to the room where they previously discovered the book. Sakura starts to blame herself for everything that has happened but Kero objects and tells her that it was the fault of the woman on the front cover of the book. Sakura turns around to find that the book is longer there and starts to search around the whole place but the presence is no longer around and Sakura starts to cry realising that everyone is gone.

Later on, Kero tells Sakura and Tomoyo about the lady and he tells them that she was water Fortune-teller and she had a good reputation until Clow Reed appeared. Her business started to dive so she would challenge Clow reed for a battle at every opportunity. Sakura wonders why she is still alive but Kero tells her that even though it is extremely difficult magic, if she had the willpower then she could live on for decades although she might not even be aware that she is dead. Kero says that Sakura was drawn to the book because of the Clow cards and that the fortune-teller might have wanted to trap Clow reed in the book. Sakura knows where the fortune-teller lives which is the well.

It is night-time and Sakura, Tomoyo and Kero touch down near the well. Kero tells Sakura that he feels something like electricity in the air as Sakura approaches the well and a barrier appears surrounding the whole of the well, which prevents Sakura to enter the dimension. Just when all hope is gone, Syaoran's Mother appears. She tells them to stand back so that she can break the barrier so that Sakura can then enter. Sakura enters the well, to find herself in a dimensional tunnel. Kero tells her that if she doesn't find the right dimension, she will be stuck in it for the rest of her life but he tells her that she can use the power of love to try and find the right dimension. Sakura finds herself in a little courtyard with a little pond with water filling up. She thinks that she has exited in the wrong dimension but Kero can sense the woman’s presence. Sakura is reassured when she notices the 2 white birds and quickly starts to follow them. She arrives in Bird Street and Kero tells her that lots of different dimensions seem to be mixed up within this dimension. Whilst running, Kero notices that the fortune-tellers presence is getting stronger and the next place they enter, they are faced with a large blue door and Sakura tells Kero that she senses the fortune-teller behind the door. When Sakura opens the door, she finds that it is filled with water.

When they surface, they are faced with the fortune-teller. Sakura asks the fortune-teller to let everyone go but she says that she will only let Sakura’s friends free, if Sakura brings Clow reed to her. The concrete pipes start to crumble around them and the fortune-teller shows the 4 bubbles in which Toya, Yukito, Syaoran and Meiling all rest and they disappear to a necklace round her neck. The fortune-teller then demands where Clow reed is but Kero tells her that Clow reed is no longer with us. As soon as the rocks stop falling in the dimension, Sakura uses the fly card to get out of the dimension. Tomoyo starts to worry about Sakura but Syaoran's Mother tells Tomoyo that she is coming. Sakura spectacularly comes out of the well and starts to look for the fortune-teller only to find that the fortune-teller is above her and is about to attack her. Sakura swiftly dodges the fortune-tellers attacks although the fortune-teller keeps on asking Sakura what she has done with Clow Reed in which Sakura keeps replying that he is no longer around. The fortune-teller, launches an attack with the ribbons and they capture Sakura but Kero and Sakura get torn away from each other’s sides.

Once captured, the fortune-teller asks Sakura to tell her where Clow reed is. Sakura tells the fortune-teller that Clow reed isn't alive anymore but the fortune-teller calls her a liar and says that he would never die. She gets so angry that she submerges Sakura in water at the top of a skyscraper. When Sakura is under the water, the fortune-teller starts to cry since she has waited so long to see Clow reed. One of her tears enters the water and Sakura sees the past and she sees what happened with the fortune-teller and Clow reed. When looking at the surface of the water, the water glows and the voice of Clow reed says, "Water is a thing that flow." When hearing this, Sakura knows what she has to do and quickly whips out the arrow card. By using the arrow card, arrows are shot at the bottom of where Sakura is so all the water flows downwards. Sakura exits the skyscraper and goes to confront the fortune-teller. Sakura says to the fortune-teller, "you really loved Mr.Clow didn't you?" Sakura starts to cry saying that it isn't nice to lose someone you love and the fortune-teller asks politely but quietly whether Clow reed is really dead. Sakura nods and the fortune-teller starts to disappearing saying that she waited forever and that she wanted to tell him something. When she has disappeared all that is left is her hair piece which was given to her by Clow reed but even the hair piece disintegrates and everyone reappears.

It is the last day in Hong Kong and Toya is wondering what to buy for his dad. Sakura tells Kero and Tomoyo that one day she wants to tell the person she loves how she feels about him.