The movie starts at 700 AD, with someone narrating to the viewers the past of Balthazar Blank (Nicholas Cage). Balthazar, Maxim Horvath (Alfred Molina) and Veronica (Monica Bellucci) are Merlin's (James A. Stephens), the greatest sorcerer ever, trusted apprentices. He taught them everything he knew and the three were sworn to protect the secrets of sorcerers. But Horvath betrays them to Morgana (Alice Krige), Merlins greatest enemy. Morgana has been trying to learn the spell (from the great book) to awake the dead and control them. By the time Balthazar and Veronica reach Merlin, everyone is slain and Merlin is in battle with Morgana.
Before Balthazar could help, Morgana overpowers Merlin with Horvaths help, and stabs him. Horvath escapes after stealing the spell from the book. Both Balthazar and Veronica start fighting with Morgana. Veronica absorbs Morgana's soul into herself, to destroy her. But when Morgana starts to possess Veronica and kill her from inside, Balthazar imprisons both in a Grimhold, a nesting doll. We can see pictures of both Veronica and Morgana appearing on the surface of the doll.
Before dying, Merlin gives Balthazar a metal dragon telling him that it would find the Prime Merlinian, the Merlin's successor, and only he could finish Morgana completely. Balthazar searches for that kid for centuries in vain, and during this time captures Abigail Williams (Nicole Ehinger) a young witch (next layer to the nesting doll) and then finally Horvath (third doll layer).
Cut to the year 2000, we see a kid waking up and getting ready to go to school. He is Dave Stutler (Jake Cherry), who is revealed to have a huge crush on on of his classmates, a girl named Becky. The kids are out on school picnic, while they are sitting at some place Dave passes a slip of paper, on which he writes a question asking Becky if she would like to be his friend or Girl friend. Becky writes her answer on the same note it and leaves it where she is sitting. When Dave tries to take the note, it flies away with the wind. Dave, chasing the piece of paper, ends up in an antique store and meets Balthazar, who has not aged even a bit. Balthazar then asks Dave to take the metal dragon in his hand. As soon as he does, the dragon comes to life, wraps around his forefinger and folding its wings, becomes a ring. Balthazar then tells him that he is a sorcerer and that he has been waiting for him for centuries. He tells Dave not to move or touch anything and goes down to basement to get the book of spells.
When Dave starts moving his hand the Grimhold breaks out of a wall and falls on the floor in front of him (the Grimhold moves with the ring when engaged). Dave picks it up but drops it when he sees an opening appearing in the middle. The outer layers of the nesting doll opens and in a very 'The Mummy' like manner lots and lots of bugs start coming out of it and start to take human form, and finally become Horvath. He tries to kill Dave, but just then Balthazar comes up and engages him in a fight. After a while Balthazar pins Horvath down and tells Dave to take the Grimhold and run. Dave escapes out and Balthazar takes Horvath into an urn to be imprisoned for 10 years. The teacher along with everyone else finds Dave finally outside the store, no one believes his story and Dave throws away the Grimhold.
Year 2010; 10 years later, Dave is now 20, and a Physics genius, a student at NYU. He still keeps the ring in his cupboard, but seems to have forgotten everything. He meets Becky again in his class and learns that she does a daily show at a local radio station. We learn that he has a lab and that he does pretty amazing experiments with electromagnetism.
Mean while, now that ten years are up, both Balthazar and Horvath escape from the urn. Horvath goes to Dave and asks him for the Grimhold, when Dave tells him that he has thrown it away, he sends wolves after him to kill him. Balthazar literally swoops in on a steel eagle and rescues him and tells him that he should start learning sorcery properly. Dave denies saying that he just wants a normal life. But Balthazar convinces him to at least try and help him to retrieve the Grimhold, and then he can decide if he wants to continue.
Both Balthazar and Horvath reach the place where the Grimhold is currently held, China Town, picked up 10 years ago by a Chinese sorcerer Sun-Lok. On the way Balthazar teaches the basic trick of magic to Dave. After a long fight Balthazar defeats both Horvath and the Sun-Lok, with a little help from Dave and captures the Grimhold. Dave does his first magic.
Dave then agrees to continue his study and Balthazar accepts him as his apprentice. They start practicing in Dave's lab. During the fight at China Town, Horvath realizes that Dave is the Prime Merlinian (when he notices the ring) and sets out to find an accomplice for himself. He meets the illusionist Drake Stone (Toby Kebbell), who agrees to help him get the Grimhold back.
Dave keeps trying to learn sorcery, but his progress is slow and disheartening. He is also trying to win Beckys affection and offers to teach her Physics. Becky also starts to like him. Balthazar tries to persuade him not to fall into the relationship trap saying love is a distraction. But Dave says he had been waiting for Becky for 10 years.
Horvath and Drake try to ambush Dave when he is dropping Becky off at her Yoga class, but Balthazar arrives in time to save the day again. Horvath mocks Dave saying he doesnt know what exactly is in the Grimhold and that Balthazar hasnt told him everything. Later Dave confronts Balthazar, and he tells Dave the whole story. When Veronica, Horvath and Balthazar were apprentices, both Balthazar and Horvath fell in love with Veronica but she chose Balthazar. With broken heart Horvath turned to Morgana for revenge and betrayed his friends. Balthazar tells Dave that even Veronica is trapped inside the Grimhold and that he has been waiting 1000 years to free her. Merlin had cast a spell to keep the three of them young so they could live to find Prime Merlinian, which he now did (Dave). And that only Dave can stop Morgana.
Dave panics and says that he is just a normal guy who just wants a normal life. Balthazar tells him that he doesnt have a choice and that he is the Prime Merlinian. He says when Dave is ready he wouldnt even need the ring to do magic. Dave is very skeptical about being that skillful as he is failing to do magic successfully even with the help of the ring.
One day when Dave fails miserably in one his attempts, he storms off saying he doesn't want to learn anymore. He meets Becky and has a moment of reminisce over their childhood. Becky boosts his confidence telling him that she always thought him to be 'cool' and different from others. At that time Horvath and Drake attack the Lab and steal the Grimhold. Dave arrives just in time to save Balthazar, but the Grimhold is gone.
Balthazar and Dave set out to get the Grimhold back. They chase each other on the streets, and Horvath finally crushes Balthazar and Dave's car. When Balthazar tries to follow him he morphs one of the women on the street to look like Veronica distracting Balthazar and escapes.
Horvath is planning to bring Morgana out and decides on Bowling Green Park as the venue for the 'Rising', process of bringing the dead back. He kills Drake and steals his energy and releases Abigail (from the second layer) and makes her kidnap Becky. He then kills Abigail and steals her energy also to use it in releasing Morgana.
Mean while Balthazar and Dave are getting ready to steal the Grimhold back. Balthazar makes Dave promise that he would do everything he could to destroy Morgana, and Dave does. They reach Drake's house and start searching. Balthazar gets stuck in a sinking carpet while Horvath corners Dave in the hall. He threatens to kill Becky and forces Dave to give up his ring. He then takes the Grimhold and leaves for the park.
When Balthazar comes back, Dave tells him everything and apologizes. Balthazar consoles him saying he would have done the same and leaves to stop Horvath. He tells Dave not to come as without his ring it might be dangerous and flies off on the steel eagle. Dave decides to help Balthazar and devices a plan and drives to the park while trying to explain everything to Becky on the way.
Horvath releases Morgana from Grimhold and she comes out in the form of Veronica. She then starts to complete Merlins circle. She uses the satellite dishes to contact each other and amplify the electromagnetic signals. Balthazar tries to stop her, but gets interrupted by the bronze bull come to life by Horvaths spell.
Dave sees the electromagnetic radiation and understands Morganas plot. He drops Becky off at a TV tower telling her she should go up the tower and change the dish's angle to disrupt the communication. Becky, even though is scared of heights, agrees to it. He then asks her about what she wrote on the note 10 years ago. He says he might not come back so he would like to know. Becky tells him to stay alive and that she will tell him after that.
He drives up to the park just in time to save Balthazar and kill Horvath (He electrocutes him with the equipment he is carrying). The metal eagle carries away the bronze bull. Just then Becky manages to rotate the dish and the circle breaks.
Balthazar absorbs Morganas soul to save Veronica, but Morgana come out in the form of spirit. Dave starts fighting with her using magic without his ring, proving that he is Prime Merlinian and kills her. He then brings Balthazar back to life by jump starting his heart using his power.
Becky just then comes to the park and tells him that she wrote on the note 'Girl Friend'. The metal eagle lands next to them. Dave asks Becky how she would like to fly to Paris.
The movie ends with the scene of both of them flying on the back of the metal eagle with Dave saying "I dont exactly know how to land this!"
