The guard leads them through a watery tunnel. Reaching a mother-of-pearl door, Xingyin cannot open it by force. The guard instructs her to use the pearl, explaining that the doors can be sealed on Queen Suihe’s command to trap intruders.

They enter the underwater city, shielded from the sea by a translucent barrier and illuminated by silk lanterns and glowing coral. Xingyin observes the Sea Immortals with their pale-yellow skin and eyes ringed in blue. They arrive at the Bright Pearl Palace, shaped like a shell and studded with pearls. In the grand hall, they kneel before Queen Suihe on her coral throne. The queen greets them, noting their disheveled state. Chang’e explains that they have brought her friend to her final resting place. Suihe reveals Ping’er’s mother is her chief attendant and sends for her. She recognizes Chang’e and mentions hearing of her recent pardon, then recognizes Xingyin as the Celestial archer praised by Prince Yanxi. Suihe invites them to stay for the gathering of the Four Seas monarchs.

Ping’er’s mother, the chief attendant, and her sister, Ping’yi, enter the hall. Seeing Ping’er’s body, Ping’yi cries out, and the chief attendant accuses them of killing her daughter. Chang’e explains that Ping’er died protecting her, and it was her final wish to come home. After being silenced by the queen, the chief attendant leaves, and Ping’yi remains with her sister’s body. One of Ping’yi’s tears transforms into a pearl, which Xingyin picks up and returns to her. Ping’yi explains that Ping’er left home after they fought over a childhood friend. She confirms the pearl tears are rare gifts and keys for loved ones to return to their realm. Understanding its significance, Xingyin offers to return the pearl necklace Ping’er gave her, but Ping’yi refuses, saying Ping’er must have loved her greatly.

Unable to sleep, Xingyin goes to her mother’s chamber. Shuxiao arrives, followed by Wenzhi. Wenzhi reveals Queen Suihe gave him a pearl ornament, allowing his messengers to enter her domain. He explains that the Southern Sea maintains cordial relations with the Demon Realm while having no formal alliances. Chang’e confronts Wenzhi about betraying Xingyin, and he expresses regret. Wenzhi warns them that Queen Suihe is treacherous and the palace contains hidden, inescapable prisons.

Xingyin refuses Wenzhi’s offer to go to the Cloud Wall, distrusting his family. She explains to her mother that the Demon Realm was once part of the Celestial Kingdom before its people were exiled for forbidden magic. Wenzhi reports that Liwei’s position is vulnerable. He explains that after the treasury breach, new wards bar entry to all outsiders, and only someone of high rank can breach them. Xingyin realizes she needs an insider to help rescue Liwei and asks Wenzhi to get a message to the Celestial Empress.

Xingyin meets the Celestial Empress in a mortal teahouse, where the empress appears in disguise. Xingyin realizes the empress planned to take her hostage to force Liwei’s compliance, but the plan is foiled by Wenzhi’s presence as a deterrent. The empress reveals Wugang has full control of the Celestial Army and plans to usurp Liwei’s position as heir. She admits she does not know the real reason the emperor attacked the moon. The empress blames Xingyin for disrupting the court’s power structure, allowing Wugang to rise.

Xingyin proposes freeing Liwei, arguing he is in mortal danger from Wugang. The empress agrees to help on one condition: Xingyin must swear on her mother’s life to end her relationship with Liwei forever and never reveal their meeting. Xingyin initially refuses, but the empress threatens to leave Liwei to his fate. Realizing she has no choice, Xingyin agrees. As a counter-bargain, she makes the empress swear never to harm her or her kin without just cause. Xingyin also demands that the empress seize Tao, from whom she needs to retrieve an elixir. She asks the empress to confine Tao with Liwei without harming him, and keep Tao’s sister uninvolved. Xingyin states that if the empress breaks her promise, her own vow will be void, freeing her to marry Liwei. The empress agrees to weaken the palace wards so Xingyin can enter alone and rescue Liwei. She adds that separate wards against the Demon race will prevent Wenzhi from entering.

Returning to the Southern Sea on a cloud, Xingyin confirms to Wenzhi she will go to the Jade Palace alone. They argue, and Wenzhi accuses her of trying to atone for past mistakes by saving everyone herself. They discuss his past betrayals and the battle at the Cloud Wall. Wenzhi admits he does not regret his actions against the Celestial Kingdom but wishes he had handled things differently with Xingyin. He confesses his victory was hollow without her and that he wants her to want him. Xingyin rebuffs him, stating she can never trust him again.

Back in the Southern Sea city, Xingyin sees a shell that gives her an idea for a decoy. She and Wenzhi find a shop belonging to Master Bingwen, a merchant she met years ago. The shop is partially flooded with luminous seawater. Xingyin trades eight songs on her flute for eight small enchanted shells that can capture and replay sounds. Leaving the shop, she explains her plan to use the shells to create musical decoys to distract the soldiers. Wenzhi makes her promise to stay alive in exchange for his non-interference. Xingyin reflects that while Wenzhi is not the honorable immortal she once thought, he is not the monster she believed him to be either.

Cloaked in invisibility, Xingyin flies over the Jade Palace walls; the empress has weakened the wards as promised. She swiftly places the eight enchanted shells in various locations around the palace grounds. In the Celestial Emperor’s courtyard, she creates a disturbance by shooting an arrow and summoning a gale. As soldiers rush in, she plays a song on her flute, then becomes invisible and flies up. She activates the shell in the emperor’s courtyard, and the soldiers, hearing the music, believe she is still there.

Xingyin leads the soldiers on a frantic chase by activating the shells one by one across the palace. She reaches the eastern courtyard where Liwei is held and finds it heavily guarded. A mysterious woman, Zhiyi, appears and agrees to help. Xingyin binds 12 guards with wind, allowing the woman to use Life Magic to render them unconscious.

Realizing the music has stopped, Xingyin and Zhiyi hurry into the room where Liwei and Tao are captive. When Xingyin grabs Tao to demand the elixir, the woman attacks her with magic, revealing she is there to rescue Tao. They are forced to flee together as more guards approach. Liwei summons a cloud, and Xingyin casts an invisibility spell as they escape. They fly out of the Celestial Kingdom, and the woman and Tao attempt to flee on a separate cloud. Liwei stops Xingyin from shooting them, using his magic to pull their cloud back. He reveals he knows the woman, calling her “Sister Zhiyi.”

Liwei reveals that Zhiyi is his long-lost half-sister. Zhiyi explains that she is the emperor’s daughter and was forbidden by the empress to reveal her identity to Liwei. She left the Immortal Realm after choosing to marry a mortal, an act considered a disgrace. Zhiyi reveals she needed the elixir for her aging mortal husband. Xingyin demands the elixir, explaining that Tao stole it after they acquired it together. Zhiyi admits her husband refused to take the elixir, sensing it was obtained dishonorably. With reluctance, she gives the bottle to Xingyin. Xingyin thanks her and promises to help her obtain another elixir if possible. Zhiyi and Tao depart on their own cloud.

Alone with Liwei, Xingyin tells him that Wugang killed Ping’er during the attack on the moon. Bound by her vow to the empress, Xingyin breaks up with Liwei. She lies, claiming the rift between their families is too great to overcome. When Liwei presses her, she lets him believe she still has feelings for Wenzhi. Heartbroken, Liwei tells her his heart will always be hers.

They return to the Southern Sea, and Liwei disguises himself with an invisibility enchantment. Xingyin uses magic to mask his presence from the guards. After arriving, Liwei takes Xingyin’s offered room. She leaves to find her mother and breaks down in her arms.

Xingyin travels to the Mortal Realm and finds her father, Houyi. In his house, she notices a painting of Chang’e with offerings and incense before it. Houyi admits he has been praying every day, hoping the smoke carries his words to her. Xingyin gives him the jade bottle containing the elixir. Houyi drinks it and is restored to his youthful, immortal form, though his hair remains gray at the temples.

The elixir’s magic begins to forcibly pull him toward the Celestial Kingdom. Xingyin uses her own power to fight the magical pull, casting her energy into her father’s body to sever the elixir’s hold. The process is draining, but she succeeds. They immediately flee to the Southern Sea on a cloud.

Xingyin brings Houyi to Chang’e’s room. Houyi and Chang’e have an emotional reunion. Houyi confesses he was furious and wretched after she took the elixir, wondering if she had schemed for immortality all along. He reveals he first saw her at his grave a year ago but was ashamed of what he had become. The couple confesses their pain, regret, and enduring love. Xingyin leaves them alone, glad that her family is finally whole.

Xingyin and Chang’e pay their final respects at Ping’er’s ancestral altar when she is laid to rest. Houyi thanks his daughter for restoring his life and trust.

When Liwei and Wenzhi encounter each other, they are hostile, exchanging barbed words. The group discusses where to go for safety, as Queen Suihe will likely betray them once news of Liwei’s escape arrives. Houyi suggests the Eastern Sea, believing the dragons will protect them.

A messenger from Queen Suihe summons Chang’e and Xingyin to the great hall where an honored guest awaits: Prince Yanxi of the Eastern Sea. Xingyin tells Liwei, Wenzhi, and her father to send for Shuxiao and wait for them outside the palace.

Xingyin and Chang’e go to the throne room. Prince Yanming, the younger brother of Prince Yanxi, greets Xingyin with an enthusiastic hug. Prince Yanxi greets them politely, expressing surprise at finding Chang’e so far from home. Xingyin carefully explains that they are in the Southern Sea because Ping’er was killed by intruders. Prince Yanxi indicates he has heard unconfirmed reports and subtly offers his understanding. Queen Suihe grows impatient with their private conversation.

Xingyin attempts to leave, but the queen tries to make them stay. Prince Yanxi smoothly supports their departure. Prince Yanming whispers he wants to see the moon, and Xingyin promises him he can visit when things settle down. A Celestial messenger arrives with an official scroll for Queen Suihe. As the queen reads it, Xingyin and Chang’e try to leave quietly.

Queen Suihe shouts for them to halt. She reveals the scroll declares them traitors and fugitives, and that harboring them will bring reprisal. She accuses them of endangering her kingdom and decides to imprison them to await the Celestial Emperor’s justice. The messenger announces that the emperor will arrive shortly.

A fight breaks out as Xingyin resists capture and aims her bow at the queen. Houyi, Liwei, Wenzhi, and Shuxiao race into the hall to join the fight. During the chaos, a guard is sent to call for reinforcements. To create an escape route, Xingyin and her father shoot arrows at the ceiling, causing it to collapse. They use magic to fly through the hole and escape the palace.

The group races to the guarded passageway exit. Wenzhi swiftly puts the guards to sleep with magic, and Xingyin uses Ping’er’s pearl to open the door so they can escape. While fleeing through the tunnel, Liwei and Wenzhi trade barbs about who truly knows Xingyin. As they surface from the tunnel, an unseen force drags them onto the beach, where Wugang and a massed force in white-gold armor are waiting.

On the beach, Wugang reveals he is now the emperor and has imprisoned the former Celestial Emperor. He holds the Celestial Empress, Prince Yanxi, and Prince Yanming as hostages. Wugang reveals his army is composed of resurrected spirits of fallen Celestial soldiers, animated by laurel seeds. He recounts a mortal king’s clay-soldier army and claims he modeled his force on it by binding deceased spirits. He explains his motivations stem from humiliation by the former emperor and his wife’s betrayal.

Wugang offers Houyi dominion over the Four Seas in exchange for his family’s allegiance. Houyi bluntly refuses, condemning Wugang’s methods. A battle ensues. Xingyin discovers the soldiers are nearly invulnerable but have a weak spot: jade discs on their armor containing laurel seeds, which are susceptible to fire and heat. She gives the Jade Dragon Bow to her father so he can wield Sky-fire. The battle is brutal, with the soldiers feeling no pain. Shuxiao is struck by the blade of a guandao enchanted with magic that drains lifeforce. Liwei contains the enchantment’s spread but cannot fully heal her on the battlefield. Seeing the dire situation, Xingyin uses the Long Dragon’s scale to summon the dragons for help.

In the chaos, Prince Yanming is fatally wounded when he throws himself in front of a blade meant for Prince Yanxi. The Four Dragons spring from the ocean in response to Xingyin’s summons. Amid their startling arrival, Wenzhi captures Wugang, holding him at sword point. Liwei tries to save Prince Yanming with Life Magic but reveals his lifeforce is already extinguished.

Wugang threatens that if he is harmed or does not return to the Jade Palace by nightfall, his army of thousands will rampage across all realms. Wenzhi tests the threat by nicking Wugang’s neck, and the entire undead army lurches forward. Trapped, the group negotiates with Wugang. They agree to release him in exchange for a week-long truce and his promise not to retaliate against the Eastern Sea. Wugang swears an oath on his parents’ spirits and departs with his army.

In his last moments, Prince Yanming asks about the dragons. At Xingyin’s request, the dragons approach him. The Long Dragon comforts the boy, promising to watch over his spirit. Prince Yanming touches the Long Dragon’s face and dies with a smile.

Prince Yanxi grieves over his brother’s body. The Pearl Dragon offers to carry them back to the Eastern Sea. Xingyin tucks the paper dragon Prince Yanming made for her into his hand as a final farewell. The Celestial Empress urges Liwei to flee with her to the Phoenix Kingdom.

The group discusses Wugang’s army, realizing the laurel seeds regenerate, providing an endless supply. Xingyin connects past events, realizing that the laurel seeds originally sprouted from her mother’s tears, and that her mother’s blood is the key to harvesting them in great numbers, making her Wugang’s true target. Houyi vows to protect Chang’e, and the dragons agree to help fight Wugang. The Long Dragon tells them evil must be struck at its roots. Xingyin declares they must destroy the laurel tree.

The Long Dragon says the laurel can only be destroyed by the most potent flame. The Celestial Empress states that Xingyin needs the Sacred Flame Feather from a sunbird’s crown. She reveals that the last sunbird lives with its vengeful mother, Lady Xihe, Goddess of the Sun, in the Fragrant Mulberry Grove. The empress explains how to find the grove by following the sun chariot’s path. Prompted by the Long Dragon, she is forced to acknowledge the existence of a key, without which entry to the grove is fatal. The Long Dragon privately tells Xingyin that only she can ease Lady Xihe’s grief and make amends for her father’s actions in slaying nine of the sunbirds.

Xingyin decides she must go to the grove but convinces her father not to come, as his presence would enrage Lady Xihe. The Long Dragon offers to take Houyi, Chang’e, and the wounded Shuxiao to safety, where it can fully heal the life-draining taint from her blood. Xingyin, Liwei, the Celestial Empress, and Wenzhi depart on clouds to find the grove. On the journey, Wenzhi comforts Xingyin, urging her not to blame herself for the tragedies. His compassion breaks through her defenses, and she weeps for all she has lost.