In the second film, The Silver City is the first location in Fantasia that Bastian visits. He arrives in a boat, accompanied by Nimbly, who quickly befriends Bastian; he was actually sent by the evil sorceress Xayide to convince Bastian to make a wish with the AURYN, because every time Bastian makes a wish, he will lose a memory. Nimbly shows Bastian that the lake is made of acid, and tries to convince him to make a wish; make the acid purple, add sugar to it, or raise the temperature so the Fantasians can go swimming in it. Bastian, however, believes that the lake is made of acid for a reason, and does nothing.
Upon docking in Silver City, Bastian notices that there does not appear to be any trouble in Fantasia. As soon as he says this, Xayide sends Giants to wreak havoc. Two of them chase Bastian to a part of the dock, but he climbs a rope Nimbly had secured for him. One of the giants tries to cut the rope, but crashes through an archway and dissolves into the acid.
Bastian falls backwards into a vent and comes across numerous creatures who help him communicate with The Childlike Empress; the Empress tells Bastian that there is another force trying to destroy Fantasia, and Bastian must name the force.
Bastian tries to rally the citizens of Silver City to fight against this currently-unnamed force, but nobody seems interested. Just then, Atreyu, riding his horse Artax, arrives and agrees to join Bastian. Meanwhile, Nimbly finally convinces Bastian to make a wish with the AURYN; Bastian wishes for a horrific dragon - named Smerg - to attack Horok Castle, where Xayide lives. This plan backfires when Smerg unleashes a fiery breath upon Silver City and takes off towards Horok Castle. Bastian finds Falkor the Luckdragon, and all four give chase.
Silver City is seen later, in the climax of the film, in a heavily ruined state. The gleaming silver has turned to black metal sheets, corrupted by The Emptiness. Bastian finds Falkor and Atreyu's lifeless body; Bastian had accidentally killed Atreyu in a fight by throwing him off a cliff. Realizing he only has two wishes left, Bastian sacrifices the memory of his mother to resurrect Atreyu. The two rekindle their friendship, but when Atreyu realizes what Bastian has sacrificed, he angrily tells Falkor that he shouldn't have let Bastian do it.
Just then, Xayide and her Giants arrive in Silver City. Xayide demands Bastian make his final wish, to go home, and leave Fantasia to be overruled by her. Bastian refuses to betray the Childlike Empress, but Xayide reminds Bastian that his last memory is of his father. Bastian, once again realizing what he is sacrificing, makes his final wish, but instead of returning home, he makes the wish for Xayide to have a heart, which ultimately defeats her and the giants; Xayide sheds a tear that restores Fantasia to its original glory, and both she and the giants explode in giant rays of light.
The Silver City is restored to its original state, and the inhabitants come out of hiding while the Childlike Empress arrives on a boat. Now that Bastian has found courage, he can return home, but Bastian doubts this, as he has used up the powers of the AURYN. Just then, the ground breaks open, revealing a large cliff overlooking waterfalls. Although terrified, Bastian hears his father telling him that he found courage. Saying goodbye to his friends, Bastian jumps off the top of the cliff and returns home safely.
Silver City is a gleaming silver shipyard surrounded by giant silver ships in a large lake of acid.
Behind the Scenes
Both the model and full-sized set of Silver City was filmed on Stage 7 of Bavaria Studios.
The faraway shots of Silver City was a large model built by Derek Meddings and his crew; the "acid" was actually knee-high water covering the floor of Stage 7.