While sailing, Sinbad comes across a golden tablet dropped by a mysterious flying creature. That night, he dreams about a man dressed in black, repeatedly calling his name, as well as a beautiful girl with an eye tattooed on the palm of her right hand.
A sudden storm throws the ship off course and Sinbad and his men find themselves near a coastal town in the country of Marabia. Swimming to the beach, he encounters the man from his dream, Prince Koura, who demands that he turn over the amulet. Sinbad narrowly escapes into the city, where he meets the Grand Vizier of Marabia, who has been acting as regent following the death of the sultan, who had no heir. The Vizier, who wears a golden mask to hide his disfigured face, explains that Sinbad’s amulet is but one piece of a puzzle, of which the Vizier has another. The Vizier relates to Sinbad a legend, which claims that the three pieces, when joined together, will reveal a map showing the way to the fabled Fountain of Destiny on the lost continent of Lemuria. He who takes the three pieces to the Fountain will receive “youth, a shield of darkness and a crown of untold riches.”
Sinbad agrees to help the Vizier in his quest for the Fountain and they join forces against the evil Prince Koura, a magician bent on using the Fountain’s gifts to conquer Marabia. Koura had previously locked the Vizier in a room and set it on fire, resulting in the disfiguring of the Vizier’s face. The creature that dropped the gold tablet was Koura’s minion, a homunculus created by his black magic. Koura uses the creature to spy on Sinbad and the Vizier and learn of their plans.
Shortly afterwards, Sinbad meets the woman in his dream, a slave girl named Margiana. Her master hires Sinbad to make a man out of his lazy, no-good son Haroun. Sinbad agrees on the condition that Margiana come along. Koura hires a ship and a crew of his own and follows Sinbad, using his magic several times to try to stop Sinbad. However, each attempt drains away part of his life force, and he ages noticeably each time.
On his journey, Sinbad encounters numerous perils, including a wooden siren figurehead on his own ship, animated by Koura’s magic, which manages to steal the map, enabling Koura to locate Lemuria. The wizard uses another homunculus to overhear the Oracle of All Knowledge describe to Sinbad what he will face in his search for the Fountain. Koura seals the men inside the Oracle’s cave, but Sinbad uses a makeshift rope to get everyone out. Haroun manages to destroy the homunculus as it attacks Sinbad. After he is captured by hostile natives, Koura animates a six-armed statue of Kali, causing the natives to set him free. Sinbad and his men arrive soon after. They fight and defeat Kali as she falls and breaks apart and find the final piece of the puzzle within Kali’s shattered remains. The natives capture Sinbad and his crew, but after they see the eye tattoo on Margiana’s hand, they instead decide to sacrifice her to a one-eyed centaur, the natives’ God of the Single Eye and the Fountain’s Guardian of Evil.
Koura arrives at the Fountain of Destiny. When he drops the first piece of the tablet into the Fountain, his life force is restored. He then summons the centaur, which fights the Fountain’s Guardian of Good, a griffin. Meanwhile, Sinbad and the others escape, rescue Margiana and reach the Fountain. They watch as the centaur kills the griffin with Koura’s aid, then Sinbad slays the centaur. Koura drops the second piece into the Fountain, which turns him invisible (the “shield of darkness”). He engages Sinbad in a swordfight. Sinbad is barely able to fend off his invisible foe, but Koura makes a fatal mistake by stepping in the Fountain itself, which reveals his silhouette, enabling Sinbad to kill him. Sinbad then drops in the third piece, and a jewel-encrusted crown rises from the depths. He gives the crown to the Vizier. When the Vizier dons the crown, his mask dissolves, revealing his restored, unscarred face. Their quest completed, Sinbad and his crew journey back to Marabia. When Margiana asks him why he did not take the crown himself, Sinbad explains, “I value freedom. A king is never really free. Why, he’s even told who he must marry.” The two of them kiss. Haroun, hanging on a rope above, asks Sinbad if he will take him on as a fully fledged seamen now. Sinbad agrees but tells Haroun to make fast with the rope. Haroun replies, “Don’t worry Captain, I trust in Allahhhhh–” just as the rope becomes loose, hurtling him downward. The rope becomes taut again leaving Haroun dangling in mid air just short of hitting the deck. Sinbad and the Vizier finish the old Arab saying Haroun started, “–But tie up your camel!” They all laugh as the ship sails away into the sunset.