Natsu and Happy take Lucy fishing in order to help clear her head so she can continue writing her novel. She questions why they should fish for Happy and Natsu winds up catching a big fish and he uses his flames to grill it and eat it. Happy gets upset and thinks that it should have been his fish and he runs away. Lucy tells Natsu that he should apologize to Happy and tells him to stop with the tough guy act. Natsu gets angry and tells her to mind her own business and walks away.
Lucy then finds Mirajane in the Fairy Tail Archives (library) and volunteers to help her organize things. Lucy is up on a ladder and accidentally falls and causes some books and things to fall as well and she finds a picture of Fairy Tail when Natsu was young. Mirajane also points out several other Fairy Tail members such as Gray, Erza, Cana, Macao, Wakaba, Elfman, Lisanna, and herself. Gray and Natsu fought constantly back then and even then, Erza would stop them from fighting. However, Mirajane was totally different back then. She was a tough girl who constantly fought with Erza, much to Lucy's disbelief.
One day, Natsu was in the East Forest and punching a picture of Gray and Erza on a tree and an egg fell out of the tree onto Natsu. It has strange markings on it and Natsu thinks that it is a dragon egg. He takes it back to Fairy Tail and wants to hatch it. Makarov tells Natsu that he will have to nurture the egg in order to get it to hatch and Erza also tells him this and thinks that this will be a good experience for Natsu. Lisanna, Mirajane's sister, tells Natsu that she will help him. Natsu accepts her help and she uses her magic to transform into a giant bird so she can keep the egg warm. Elfman feels depressed since he can't do a full transformation like Lisanna can and he also lost his parakeet.
The egg starts to move and jumps to Natsu. Lisanna says that the egg wants Natsu to keep it warm. They go to build a secret base in order to hatch it. She transforms into a giant rabbit and builds a shelter after Natsu tried and failed to construct anything. They take the egg in and Lisanna says that they are like a family with Natsu being the dad, she being the mom, and the egg being the baby.
Meanwhile, Wakaba and Macao are talking about Natsu and Lisanna and how they have gotten close and Mirajane busts the table that they were sitting at and is mad that Natsu and Lisanna are getting close. She thinks that Natsu is on Erza's team.
Natsu takes Lisanna to where he first found the egg and they are ambushed by a Gorian, or "Forest Vulcan." Natsu gives the egg to Lisanna and tells her that he will protect them. He charges at the ape monster and is knocked away. This continues to happen and Lisanna tells Natsu that he should use his magic. Natsu says that he won't use magic since the monster isn't using magic and he says that since he is the "daddy" that he needs to protect them. He charges again and gets knocked hard into a tree and he bounces off and head-butts the monster and knocks it out. Lisanna is thrilled that Natsu won but says that he is a wreck.
It starts to rain so Natsu and Lisanna head back to the shelter. She asks what Natsu does for meals and he says that he works for them. She says that she will cook for him and that Mirajane and Elfman are also good cooks. Natsu gets the idea that she wants to cook the egg and she assures him that she wants to see it hatch. They fall asleep that night and a shadow approaches.
When the morning comes, Natsu and Lisanna awake to find the egg missing. they go to Fairy Tail where Natsu goes around accusing everyone of stealing his egg. Everyone denies it and tensions are starting to rise and Elfman appears with the egg and tells Natsu that he saw that the egg was getting cold that night so he took it to keep it warm. Just when he hands it to Natsu, the egg cracks and hatches. It is a small blue winged cat and Lisanna notices that everyone is taken in by the little kitty and that they are happy and Natsu decides that he will name it Happy.
Natsu brings some big fish to Happy and they make up.
Back to the present, Makarov comes and asks for Mirajane's help and Lucy looks at the picture again and wonders what happened to Lisanna.