Headmasters starts with Galvatron leading a new batch of Destrons to wage war on Cybertron, the Destron Headmasters. The Cybertrons are rescued by the arrival of the Cybertron Headmasters, led by Fortress (Cerebros, the head of Fortress Maximus). It is revealed that Fortress Maximus left Cybertron millions of years ago in search of energy, and have finally managed to come home. He explains that the Headmasters are from a planet called Master; the human-sized robots who live there built themselves Transformers-sized bodies. They can then transform themselves into the heads of the robots, and have now joined the Cybertron-Destron war.

Following the destruction of the magical floating device from OVA 1, the Magic Academy falls to earth, but unfortunately lands on and breaks a demon seal, releasing hundreds of ancient demons into the forest around the academy. The teachers are barely keeping the demons away and are desperately searching for the pieces of the floating device, so to earn more magic stones, all of the students from Amelia's class decide to leave the academy (even though they were told not to) to find the missing pieces.

There is a magical academy that is located on a floating island in the sky. This OVA is about the students of one of the academy's classes, who's only chance not to fail the semester is to win a competition where they must show off their magic skills.

Himeji Wakaba is a 5th year elementary school student, and she has the ability to see things that others can't. They are mostly frightening evil spirits, and they tend to do bad things to people who are close to her. As a result, Wakaba has no friends and rarely smiles. On a couple of occasions, she brings home stray animals, but her parents won't let her keep them. However, they're worried about their sad, creepy daughter, so one day they decide that whatever Wakaba brings home next, they'll let her keep. The next thing she brings home is a pink monster called "Pupipo", but her parents stand by their decision and let her keep it. No one is quite sure what Pupipo is, but it protects Wakaba from the other things she sees. Pupipo also helps Wakaba make friends with an occult-obsessed transfer student and solve problems with bullying. Wakaba's life is a much better place with her pet pink monster!