While unconscious, Sora flash backs to a memory from his time at Destiny Islands where he and Riku entered the Secret Place to investigate a noise they believed to be a monster. The two agree that regardless of what lay ahead, they'd be able to defeat it together.
Sora wakes up to the sound of Donald Duck and Pinocchio fighting over the Gummi Block. Pinocchio claims that he found the Gummi and isn't lying, but his nose begins to grow. Donald tells Sora that he took their Gummi Block when Jiminy Cricket pops out from under Donald's hat. He explains that a fairy tasked him to be his conscience, but the two were separated when their homeworld was destroyed. Jiminy scolds Pinocchio for lying and causing his nose to grow and Pinoccho promises to never lie again, causing it to shrink back to a normal size. Jiminy is pleased and reminds Pinocchio that he must behave if he is to keep his promise to Geppetto and become a real boy.
Pinocchio takes the group to the shripwreck where they meet Geppetto, Pinocchio's father, and their pets Figaro and Cleo. Geppetto explains that he's been collecting Gummi Blocks in order to make a ship that they can use to escape. He asks the group if they already have a ship, but Donald switches the topic by asking about their whereabouts. Geppetto reveals that they're inside the belly of Monstro the whale. Pinocchio runs off to find more Gummi Blocks. Geppetto tells the group of his wish for Pinocchio to become a real boy when they hear Pinocchio scream. They notice that a giant Heartless, the Parasite Cage, has captured Pinocchio and it runs deeper into Monstro's stomach. Geppetto attempts to go after it, but Sora promises that he'll find Pinocchio and bring him back.
The group follows the Parasite Cage to an open chamber where they find Riku carrying Pinocchio out of the Heartless. Sora calls Riku out and questions his actions, but Riku rebuffs the statement by claiming that Sora only seems to care about showing off the Keyblade instead of looking for a way to save Kairi. He explains that a puppet with no heart who lost his heart may hold the key to saving her. Sora asks about Kairi's condition but is ignored. Riku asks Sora to choose between Kairi and Pinocchio, but notices Sora tightening his grip on the Keyblade. He scoffs at the prospect of Sora fighting him over a puppet that has no heart, but Sora explains that he still has a conscience. At that moment, Jiminy rushes to check up on Pinocchio. Sora further explains that his own conscience is telling him that Riku is on the wrong side and raises his weapon.