Plot hole: What was the point of Jason holding onto the key to the evil spirit's book when Secret Heart Bear can simply create a key herself?
Continuity mistake: When the Care Bears boat begins to be pulled into the whirlpool, made by the evil spirit fish, one of the bears grabs a rope and sends a special star into the sky to help them, attached to the rope. The bear then picks the end of the rope up, and begins to tie it to the mast. In the next shot you can see the end of the rope still laying on the floor again, unattatched to the mast, the in the next shot it's back on the mast again.
Revealing mistake: In the scene where the evil spell takes over the tree in the Forest of Feelings, Tenderheart Lion has his symbol on his belly in the shot as Swift Heart rabbit is coming to the rescue. Even though they don't get their symbols until the end of the movie.
Continuity mistake: When Tenderheart Bear is in the trailer watching Nicholas and Fetuccini from the doorway, notice the wall below Fetuccini's left hand as he speaks: it's plain, flat pieces of wood. But when Tenderheart is suddenly forced to hide beneath the desk, he spots a large hole in the wall through which he can see Nicholas. It shouldn't be there at all since the adjacent wall on the opposite side had no visible holes in the previous shot.
Continuity mistake: When Nicholas opens the door to reveal that Fetuccini has been possessed by a sleeping spell, a top hat and cape are visible, hanging from their own hooks on a nearby coat rack. But soon the evil spirit convinces Nicholas to perform magic tricks on Fetuccini's behalf. Once he reaches over to grab the hat and cape, they are suddenly hanging by the same hook.
Continuity mistake: During "Home is in the Heart" after we meet the Care Bear Cousins we see everyone weaving yellow and red ribbons around a pole. Then the camera cuts to a more distant view of them sliding down some clouds away from the finished pole. The trouble is, the yellow and red color scheme we saw on the pole a minute ago is now a multi-colored rainbow scheme.
Other mistake: During the climactic moment when they're defeating the book, Jason shoves the key into the lock, sealing the evil within. However, he shoves the key into the lock upside down.
Continuity mistake: As the Care Bears "stare" at the evil spirit bird, Friend Bear can be seen on the Cloud Boat and the cliff at the same time!