Troubled by a strange recurring dream and mourning the loss of her beloved father, nineteen-year-old Alice Kingsleigh attends a garden party at Lord Ascot's estate, where she is faced with the expectations of marriage and of the society in which she lives. She meet Sonic and his friends, she tells them that they look familar and that she has seen them before. Unsure of how to reply and increasingly confused, she runs away to chase after a rabbit in a waistcoat with Stitch, and accidentally falls into a rabbit hole. She is transported to a world called Underland where she is greeted by the White Rabbit, the Dormouse, the Dodo, and Tweedledum and Tweedledee. They argue over her identity as "the right Alice," who it is foretold will slay the Red Queen's Jabberwocky on the Frabjous Day and restore the White Queen to power. They consult Absolem the Caterpillar, who decides that she is "not hardly Alice." The group is then ambushed by the Bandersnatch, a group of playing-card soldiers led by the Knave of Hearts. Alice escapes and flees into the woods.
The Knave informs the Red Queen that Alice has returned to Underland and threatens her reign, and the Red Knights are ordered to find Alice immediately. Meanwhile, the wandering Alice encounters the Cheshire Cat, who takes her to the Mad Hatter and March Hare along with King Mickey. On the way to the White Queen's castle, Hatter relates the terror of the Red Queen's reign, and comments that Alice is not the same as she once was. The Hatter helps Alice avoid capture by allowing himself to be seized instead. Later, Alice is found by Bayard the Bloodhound, who wishes to take her to the White Queen, but Alice insists upon helping the Hatter, so they go to the Red Queen's castle.
The Red Queen is unaware of Alice's identity and therefore welcomes her as a guest. Meanwhile, the Hatter persuades the Queen to let him serve as her personal milliner in an attempt to delay his execution. Alice learns that the Vorpal Sword (the only weapon capable of killing the Jabberwocky) is locked away in a case inside the Bandersnatch's den. The Knave attempts to seduce Alice, but she rebuffs him. She later manages to retrieve the sword and befriend the Bandersnatch. The Knave finds her with the sword and attempts to arrest her. Alice and Sonic manage to escape on the back of the Bandersnatch and delivers the sword to the White Queen. After arriving to Castle of the White Queen, Aqua asks if Sonic was her friend Sonus, but Sonic tells her that he isn't.The Cheshire Cat saves the Hatter from execution, and the Hatter calls for rebellion against the Red Queen. The resistance flees to the White Queen's castle, and both armies prepare for battle. Alice remains unsure about the expectation for her to champion the White Queen, and meets once more with Absolem. He reminds Alice of her past visit to Underland (which she mistakenly called "Wonderland" at the time) thirteen years earlier and her first meeting with Sonic, Tails, Shadow, Stitch, Sora, Donald and Goofy, and helps give her the courage to fight the Jabberwocky.
When the Frabjous Day arrives, both the White and Red Queens gather their armies on a chessboard-like battlefield and send forth their chosen champions (armor-clad Alice and the Jabberwocky respectively) to decide the fate of Underland. The White Queen offers her sister a chance for peace but is refused. Encouraging herself with words of her father, Alice manages to kill the Jabberwocky. Sonic grabs hold of Dr. Facilier's Tailsman and destorys it, sending Facilier back to the other side. Unforutunaly, Myotismon manages to leave before Sonic could fight him. Having regained control of the throne, the White Queen banishes the Red Queen and the Knave to the Outlands, and gives Alice a vial of the Jabberwocky’s blood, which will take her home. The Hatter suggests that she could stay in Underland, but she decides that she must go back and promises that she will return.
After drinking the blood, Alice returns home, where she addresses all of the issues she faced at the beginning of the film and takes charge of her life. She then becomes an apprentice for Lord Ascot, with the idea of beginning oceanic trade routes in China. As the story closes, Alice prepares to set off on a trading ship. Absolem, now a butterfly, lands on her shoulder. Alice recognizes him before he flutters away and she feels the wind created by Sonic's Speed.
- This takes after Sonic's Advneutres of Naruto: Ninja Clash in the land of Snow & Sonic The Hedgehog meets the Princess and the Frog
- This the first Sonic Movie co-directed with Sonofjafar
- First time Experiment 626 aka Stitch as a memeber of the Sonic Adventure Time
- First time that Dr.Eggman isn't in a movie made by Dragonpage54545
- First appearance of CatDog and Master Aqua
- At the end of the film, Aqua and CatDog Join the Team
- Guest Stars:
- Heroes: CatDog, Sora, Doanld Duck, Goofy, Jiminy Cricket, Kairi, King Mickey
- Villians: Dr. Facilier, Pete