The students of Canterlot High School prepare for the Friendship Games, an academic and sporting competition regularly held between their school's team, the Wondercolts, and the undefeated Shadowbolts from Crystal Prep Academy. Sunset Shimmer, who has been observing her friends' magical ability to "pony up" (grow pony-like ears, tails, and wings) whenever they play musical instruments, becomes concerned when Rainbow Dash transforms during a pep rally, seemingly at random. Tasked with finding the cause of this development, Sunset attempts to contact Twilight Sparkle in Equestria for advice, but receives no response.

Meanwhile, Crystal Prep is attended by the counterpart of Twilight, a school outcast who has been investigating the magical activity surrounding Canterlot High. Twilight builds a locket-like device with which to detect and contain the magic for further study, hoping this will secure her application for Everton, a coveted independent study program. However, Abacus Cinch, her school principal, threatens to revoke the application so as to blackmail Twilight into participating in the Friendship Games and maintain Crystal Prep's victory record.

Upon Twilight's arrival at Canterlot High, her device detects Sunset and her friends' magic and leads Twilight to them; as she approaches, the device inadvertently drains Rarity's magic when she "ponies up" after making uniforms for her friends. Sunset, initially mistaking Twilight for her pony counterpart, quickly realizes the misunderstanding and considers consulting the pony Twilight in person. When Crystal Prep's Twilight follows her to the portal to Equestria, the device absorbs its magic and deactivates it. The device similarly affects Pinkie Pie and Fluttershy when they attempt to befriend Twilight during the games, briefly tearing open dimensional rifts to Equestria as a result each time.

Following Twilight's victory in the games' academic decathlon, the games continue with a "tricross relay", a relay race between archery, speed skating and motocross. Applejack transforms after advising a struggling Twilight in her stage of the race, causing the device to steal Applejack's magic and create a rift that temporarily brings monstrous plants through. Rainbow Dash "ponies up" to save the other competitors before losing her own magic, allowing Canterlot High to win the event to tie with Crystal Prep, but causing Cinch to accuse Canterlot High of cheating due to their perceived advantage through magic.

Before the final event, Cinch and the Shadowbolts pressure Twilight into releasing the accumulated magic within her device to harness it against the Wondercolts. The magic instead corrupts Twilight, turning her into a winged and horned monster,[N 1] and she proceeds to obsessively open more rifts that threaten to destroy the parallel world. As the Wondercolts and Shadowbolts work together to save their classmates, Sunset notices her friends' magical auras and realizes that their magic manifests when they exhibit the same traits as the Elements of Harmony. Gathering their magic with the device, Sunset assumes an angelic form[N 2] with an appearance of Twilight's new Father and closes the rifts. She and Colter then help Twilight regain her senses alongside Spike, Twilight's dog, returning her to normal.

Both schools, including the repentant Shadowbolts, accost Cinch for manipulating Twilight. Refusing to relent, Cinch threatens to report the incident to the school board. When taunted that no one would believe her account of the magical incidents, however, she concedes to a tie that is celebrated by both teams. Twilight, reconsidering her Everton application, realizes she is happier at Canterlot High and transfers there, where Sunset and the other students welcome her as a new friend.

In a pre-credits scene, the Twilight from Equestria emerges from the reactivated portal with the counterparts of her friends gathered around it. She apologizes for her absence, explaining that she has just escaped from a time travel loop, before gawking at the sight of her own counterpart.