Once apon a time there was a little girl named Wisp. She was asked to find the Spear of Light, so she could restore color to a world of gray. Along the way, she meets a Sprite named Twink, and together, they find a magical horse named Starlite. While on her journey, she finds a baby. It is raining, so she takes the baby inside a cave. In the cave she finds a belt, which is the Color Belt. When Wisp puts the belt on, she sees an image of the Color Kids - keepers of the Color Crystals, and they have been kidnapped! In order to find the Spear of Light, she must find each of the color kids first.

After she finds the Color Kids, the evil Murky and Lurky kidnap the baby to take to their master! Wisp gets the baby back by defeating their master, and finds out that the baby is the Spear of Light! All color is restored to the land, and Wisp is named "Rainbow Brite" ruler of "Rainbow Land."

The Color Kids each live in their own part of Rainbow Land, and they each have Sprites that mine Color Crystals in the Color Caves. The Sprites have their own language that only Rainbow Brite and the Color Kids can understand.

Murky Dismal and Lurky live in a cave located in The Pits near Rainbow Land. They want to make Rainbow Land dark and dreary. Murky is the "leader" of the group, and makes Lurky do all the work. In their Grunge Buggy, they ride around and try to steal Rainbow Brite's Star Sprinkles to make a potion that will turn everything to gray.