Jackie finds the Sheep talisman in a train, but he is immediately attacked by Shadowkhan, who take the talisman and throw it to the Enforcers, who are in a helicopter. They then launch missiles to destroy the rails and crash the train, but Jackie escapes, boards the helicopter, and escapes with the talisman. Jackie arrives at Uncle's shop where Jade is waiting for Jackie to take her to the Melvin World amusement park, but Uncle insists that Jackie help Uncle research what power the talisman holds. (No one pays attention to the fact that Jackie is nearly asleep on his feet.)
While the others do research, Jade steals the talisman from its anti-dark-magic box, intending to activate it on her own. She succeeds, and the result is she projects her soul (or astral self) from her body. She realizes that she can fly and move through walls, and she is invisible and inaudible. Meanwhile, Finn and Ratso sneak to the shop, using the talisman detector to sneak past the library and take the talisman from Jade's body. It's so surprisingly easy that they exaggerate it as they give the talisman to Valmont, claiming to have fought Jackie to get it. Without comment, Valmont gives the talisman to Shendu, who is pleased with it but still needs the others. Then Ratso lets slip that they got it of a sleeping child, and Shendu realizes that the child has projected her soul, leaving her body empty. He flies to Jade's body, arriving just after she gets back to the room and notices the talisman missing. Before she can do anything else, he possesses her body
He then goes downstairs. "Jade" tells Jackie that he/she wants to go to Section 13, while the real Jade tries and fails to warn her family. Jackie tells Captain Black to pick her up, but Jade wonders why this ghost is so interested in going there. With a shock, she realizes it's after the talismans and exclaims that it must be working for the Dark Hand. As "Jade" is taken away, Uncle learns the power of the talisman, and as he describes the abilities of astral projection, he says astral bodies cannot be heard or seen unless they enter someone's dreams. Jade hears this and seizes the opportunity when Jackie falls asleep doing chores. She enters Jackie's dreams and warns him about the spirit. He doesn't believe her at first, and he nearly meets disaster by sleepwalking on the roof, but she convinces him to check the box and see that the talisman's gone. Waking up, he and Uncle confirm this, and Uncle realizes, "The Sheep talisman has put a wolf in sheep's clothing." He immediately begins research on a Chi spell to evict the demon, and he sends Jackie to stop the impostor.
Meanwhile, Shendu is unpleasantly surprised to find that Jackie told Captain Black about "her" wished-for vacation. Instead of going to Section 13, she has been taken to Melvin World. Although "she" tolerates the diversion in angry silence, this changes when Jackie catches up to them and tries to warn her chaperones. "She" responds by knocking them out and moving to fight Chan. She cannot prevail against him, so she summons the Shadowkhan instead. The battle moves onto a rollercoaster, with Shendu in one car hoping to run Jackie down. Just then, Jackie gets a cell phone call from Uncle, who has found the spell and requests that Jade be put on the phone. Jackie struggles his way to her side and puts the phone to her ear. Uncle chants the spell, and the magic goes through the phone line, expelling Shendu from Jade's body and flinging him back to his statue form. As he curses that he cannot break free, Valmont remarks, "Back so soon, Shendu? And what, no talismans?"
Jade quickly moves back into her body and apologizes to Jackie. He acknowledges that it is her fault that the Dark Hand now has a talisman, but it is also thanks to her that the rest of them are still safe.