The Russo family except Alex (Selena Gomez), who is staying with her best friend Harper Finkle (Jennifer Stone), are preparing for a vacation to the Caribbean. Alex decides to sneak a peek at Justin (David Henrie)’s personal belongings when his enchanted backpack attacks Alex trapping her as Justin had planned. When her father, Jerry (David DeLuise) comes down to help he accidentally speaks of the forbidden book of spells and how he let Justin borrow it. Alex wants to go to a party with Harper but her mother, Theresa (Maria Canals Barrera) tells her she can not go to the party because she was untrustworthy even with Harper around. After her parents go out, and her brothers are not in sight, Alex puts a spell on the sub-station with the help of the family wand and forbidden book of spells to become a train so that she and Harper can go to the party (since her parents told her she wasn’t allowed to leave the building), but Alex and Harper miss the party after almost getting killed by a real subway train, only to be saved by Justin, using the full-wizard wand to do so. Unfortunately, the frame of the substation falls off, just as their parents come back. Because of this, Alex is forced to go on vacation with the rest of the family to the Caribbean, having to leave their wands at home. Along the way they meet a street magician and former wizard (Steve Valentine) (who lost the full-wizard contest to his older brother) named Archie who wants to turn his girlfriend, Giselle, from a parrot back into a human by finding the Stone of Dreams, which has the power to grant any wish or reverse any spell. Jerry considers it crazy since many wizards have gone on the quest and never returned.

Later, after Alex was about to use a spell on her mother to convince her to let Alex hang out with a boy, she gets caught, grounded and forbidden to use magic. After a heated argument with Theresa, Alex, in a fit of rage, wishes that her parents had never met; unfortunately, the smuggled full-wizard wand and spell book, which Alex was holding at the time, grants her wish. As a result, Jerry and Theresa do not remember Justin, Alex and Max (Jake T. Austin) or each other.