Andy and some of the toys have gone missing. Gameplay takes place in several notable areas from Toy Story, including Andy's Bedroom, and the yard outside Andy's house.
Sora arrives in Toy Box along with Donald and Goofy in Andy's Bedroom, the trio altered to be toys to coincide with the central inhabitants of the world. They are met immediately by Heartless and defeat them while being watched by Woody, Buzz Lightyear, Hamm, Rex, The Little Green Men, and Toy Soldiers. Woody, Hamm, Rex and the Green Men greet them openly, while Buzz remains suspicious of them. Rex and Hamm claim Sora to be the action figure of video game protagonist Yozora: from their game Verum Rex, with Buzz remaining skeptical. Woody and the others inform that the rest of Andy's toys, including Andy and his mother, vanished as the Heartless appeared. On the insistance of Hamm, Rex and the others the group aligned to go to Galaxy Toys, in search of the others.
Upon arriving at Galaxy Toys, Young Xehanort, appeared to reveal they are in a split version of the world, the others trapped in the other. Using Heartless to possess the store's Toys, Sora and the others were forced into battle. From there Rex, Hamm and the Little Green Men were scattered across the store: Rex in the Action Figure first floor store, Hamm in Babies & Toddlers, and the Little Green Men in the Exterior children's play area, guarded by various forms of Heartless possessed toys.
After rescuing them all, on Buzz's demand the toys began to return to Andy's house to wait for their friends to return. However, Rex separated from the group to go to the Video Game store, in order to prove that Sora is the Verum Rex character. Upon reaching Rex, Buzz was possessed by a Heartless, and Young Xehanort reveals to Sora that he is using the toys as part of an experiment, that all toys in this world have hearts, and that he is testing the strength of their bonds.
Sora is propelled into the game by Xehanort, having to fight his way out. Upon return, the others reveal that Buzz was captured and taken through a doark corridor. Sarge then arrives, with information regarding the appearance of a dark portal in the children's play palace area behind the exterior play area of Babies & Toddlers. Sora and company progressed through to meet with an unconscious Buzz, suspended mid-air behind Young Xehanort.
Woody's bond with Buzz and his and Sora's combined hearts were enough to return Buzz to the normal, prompting Young Xehanort to dissipate, leaving Sora with a message to "Find the hearts joined to yours" and the King of Toys Heartless. Upon the Heartless's defeat, Sora, Donald and Goofy apologize for not being able to help Woody, Buzz and the others rejoin with their friends. However, Woody and Buzz reveal that Andy has been a part of their hearts all along, and ask for them to become a part of Sora's.
In this world, Sora, Donald, and Goofy take on the form of action figures to blend in with the Toys. Interestingly, Rex recognizes Sora as his favorite video game character, Yozora from Verum Rex.