A sunny day in the late 1960s, the Archies are singing "Sugar Sugar" kids are playing and a little girl named Katherine Lewis is playing with her dog. Her older self narrates that she comes from a long line of dentists, such as her father, her grandfather and great grandfather, who once treated patients during the Civil War. Her father however has been dead for a year and as a birthday treat, Katherine and her mother go to the dentist. Her dentist, Dr. Green is kind to her and when he pulls a tooth out, he advises her to put it under her pillow so that the Tooth Fairy can turn it into a coin.
Years later, Katherine has grown up and is now a major success. Dr. Green is dead, so she has taken over his profession. She has her own house and is not in a relationship at all, something that she seems to be okay with. When a poindexter asks her out, she simply responds by putting water into his mouth.
After work, Katherine dines with her friend Mindy. They talk about life and how happy Mindy is while Katherine remains unhappy with her social life. She congratulates a man who is celebrating his bachelor party and then sees another man, sitting a table reading the newspaper. Even so, she makes no move.
Another day comes and she is sitting at home, bored and listening to a message from Mindy. Katherine comes into work later that day where her other friend and receptionist Gwen talks about her boyfriend Dan's mother. Turns out they hate each other but Katherine is too immersed in her work to care. However, after she finds out that one of her patients cancelled an appointment, she decides to rush over the bank and deposit a few checks. On the way she waves to Mindy, runs into the path of a bicyclist and the screen goes white…
Katherine finds herself in a trailer park in the middle of a rocky desert, with signs reading "Judgement", "The World", "Training", an iron cage called the Hellevator and a boarding ramp that acts as a Stairway to Heaven. While discussing the last minute's events with a gatekeeper, Katherine realizes that she is dead and is instructed to wait for her supervisor.
The supervisor, a tougher-than-nails sort of woman named Rogers shows up to introduce herself. After witnessing a poor unfortunate man being sent down that black iron cage known as the Hellevator, Rogers tells Katherine that she is not in Heaven, but in Limbo, a magical place where recently deceased victims are to do selfless tasks while waiting to be judged for either side of the afterlife. As she was a dentist who chose to "inflict pain and untold suffering on countless people" Rogers doesn't seem to like Katherine very much, but she is willing to help her find a job while the latter awaits judgement. While going through a portfolio of dentists, Rogers finds an opening for a job called "bicuspid retrieval" (the previous applicant was fired) and Katherine accepts. "Little children will be pleased to know you are coming," says Rogers and suddenly, it hits Katherine:
She is going to be the Tooth Fairy.
Some time later, Katherine learns the basics of "How to be a Tooth Fairy 101". First she is given the right dress ("I look like Cinderella on Ice!" she complains to Rogers). Next she is given a magic wand, or "le baton magique" as her fast-talking instructor Raul puts it. Finally, she is given a flying lesson that goes awry, ending with her crashing into a wall. "I suppose you'll cover stopping in your next lesson?" asks Katherine.
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Back in Limbo, Rogers tells Katherine that because of her actions, the Tooth Fairy program is in serious jeopardy. Not that it matters to Katherine who finally confesses why she never loved anyone: she was afraid they would go away like her father. But after all that she has experienced, she has finally learned for the better, something that she confirms with Raul. Unfortunately, Rogers is undaunted by Katherine's change of heart and orders a pair of guards to take her to the Hellevator despite the now ex-Tooth Fairy's protests. Katherine mouths her goodbyes to Raul and tells Rogers to go to Hell before the down button is pressed and she is sent down herself. As she descends, a rapid-fire montage of her life in black and white ensues set to a cover of "It's a Heartache". The montage ends in color with the moment of Katherine's fatal encounter with the bike messenger.
Katherine wakes up to find Mindy and the bike messenger greeting her. At first, she is convinced that it was all a dream, but then she finds Raul, who is working as a florist and Rogers working as a traffic cop. She has been given a second chance. A second chance that she needs to make the most of.
