Buchio, a 20-year-old cat, is reborn as a nekomata. His family records a video of his transformation and hopes to upload it to YouTube, but Buchio is very shy and requests they do not. Mu-chan, a young human girl, tells the news to Jiro, a kind crow tengu. Buchio struggles to fill out paperwork so he can be added to the Youkai Rebirth Registry. Confused by his new existence as a youkai, Buchio visits Jiro and Tazenbo for guidance. Mu-chan sees a passing daidarabocchi while visiting Jiro. Jiro introduces Buchio to Yuri, a kitsune who offers to tutor Buchio in transformation magic. With practice, Buchio is able to give himself human hands.

During an Obon festival, Mu-chan is visited by the spirit of her deceased grandfather, but is upset by the absence of her father, who is missing and presumed dead. She overhears her mother speaking to a detective who says Mu-chan's father was likely swallowed by the void, a dimension between the real world and the afterlife. Jiro resolves to act as a parental figure for Mu-chan in her father's absence. While walking home, Mu-chan sees a dark shadow in the forest.

Mu-chan reflects on her father's disappearance. Though her memories of him are fond, she can no longer remember his voice. Yuri hosts a barbecue with Jiro, Buchio, and the kids, as well as her friends Taira (a 27-year-old human), Yasu (a 33-year-old okuri-itachi), and Benmaru (a 125-year-old Betobeto-san). Afterwards, Buchio wonders why he became a nekomata. Benmaru tells him he is confused because he has not found his raison d'être for why he was brought to life, something all youkai have. Jiro recommends he express his feelings of gratitude to his family.

During a literature class, Rain the kappa drops an eraser, which is returned by Ryo, a human boy she has a crush on. Rain is overwhelmed by her emotions and faints. Rain's friend recommends she tell Ryo her feelings, but Rain is too shy. Rain asks Hanako-san for guidance, who advises she find a way to express her feelings without words by passing a baton to Ryo in the upcoming relay race.

Mu-chan follows Jiro and Hayachiyo as they investigate a spiritual disturbance in the forest. Mu-chan is hypnotized by a snake spirit that compels her to weaken the barrier protecting a sacred cedar tree before she is rescued by Jiro. Buchio learns how to transform ordinary objects into a bow and arrow. Buchio asks Yuri about her family, which makes Yuri angry and upset. The students perform an athletic festival where they must climb through a spiderweb woven by a tsuchigumo and walk across planks of ice created by a yuki-onna, among other activities. Rain successfully passes the baton to Ryo in the relay race.

Mu-chan once again sees a dark shadow in the forest before running into Benmaru. Benmaru reveals that before he took his present form he was a dark shadow himself, during which time he was overwhelmed by feelings of loneliness that drove him to prey on humans.

Buchio reminisces about his life as a cat. After the Ōishis rescued him from a kite attack as a kitten, he witnessed Takumi's birth and lived with the family for many years. However, he is still uncertain about his reason for becoming a nekomata. While walking, Takumi and Buchio are attacked by a nue, but Buchio is able to scare it off by transforming into an archer. Buchio advances his training and is able to transform into Takumi; the two use this to play a prank on Takumi's mother, but she quickly sees through the ruse.

Mu-chan's grandmother notices she is upset about Jiro and tells her a story from his past: A hundred years prior, Jiro saved the town from a flash flood by killing the snake spirit responsible. Jiro nearly drowned, but survived. Mu-chan tells Jiro she hates him risking his life and vows to protect him. Jiro suddenly collapses and disappears, leaving behind a single feather. In a flashback to the previous day, the snake returns as a vengeful spirit and seeks to destroy the cedar tree, which is Jiro's true body. While Jiro affirms his decision to save the town 100 years prior, he chooses to atone for the murder by accepting the snake's vengeful curse.

Mu-chan, Tazenbo, Hayachiyo, Yuri, and Buchio go to the cedar tree to confront the snake spirit. Buchio transforms into Jiro, provoking the snake into relinquishing the tree. While the snake is distracted, Mu-chan uses cloth from her hakama to repair the tree's barrier. Jiro is reborn and makes peace with the snake, accepting its grudge and offering to welcome it when it reincarnates. This appeases the spirit, allowing it to pass on to the afterlife. In a flashback, it is revealed the snake was once a suijin married to a nobleman; however, the nobleman's mistress poisoned her, turning her into a snake and causing her to lash out against Fuchigamori in anguish. In a post-credits scene, a man looks at a picture of Buchio and expresses interest in his transformation.

While fishing with his friends, Tazenbo sees a bunrei of the local dragon god in the river. The man from the previous post-credits scene is revealed to be Gorozaemon Sanmoto, a demon king and famous celebrity. Sanmoto invites Buchio to his office in Tokyo. Buchio meets Sanmoto's secretary, Suzu, who is a fellow nekomata. Back in Fuchigamori, Buchio tells the Ōishis his raison d'être for becoming a nekomata was to repay them for their kindness in raising him. Buchio wonders if he should get a job that aligns with his youkai powers, but Benmaru advises him to follow his passions instead. Buchio attends driving school to obtain a driver's license, and becomes friends with Chiaki, a recently-reborn car tsukumogami.

The tengu meet with the dragon god, who takes the form of an idol. She warns Buchio to be wary of Sanmoto. Troubled by the warning, Buchio contacts Suzu. Suzu reveals that she became a nekomata due to negative emotions and nearly became a monster, but Sanmoto convinced her to choose a happier life. A black rift appears in the sky, depositing a feral raiju onto the school field. It rampages through the school, but Jiro is able to send it back to the clouds. In a hi-tech facility, scientists observe the rift and decide to investigate Fuchigamori.

Yuri sells oshibana at a fair and Buchio meets Kazuhiko, Chiaki's elderly partner. The oshibana makes Kazuhiko reminisce about his wife, who died of illness last year. Yuri reminisces about her family, who are proud kitsune of noble heritage. She became disgusted with her father's elitism and obsession with racial hygiene, causing her to leave the family. Buchio advises Yuri to talk to her family, but this sends Yuri into a rage due to her envy of Buchio's happy family.

That night, a group of railway workers see a train that is empty except for a single woman. The woman panics at the sight of youkai and runs away. The next day, an unknown woman enters Yuri's home, and both become dizzy and faint. Taira visits Yuri's house and talks to the woman, who is also called Yuri and recognizes Taira but thinks Buchio is an ordinary cat. Meanwhile, "our" Yuri wakes up in a parallel universe where youkai do not exist. In the youkai universe, investigators from the Space-Time Laboratory explain that the two Yuris switched universes due to a dimensional instability, and use a device to return them to their home universes.

Yuri apologizes for lashing out at Buchio. Yuri's little brother, Tsubaki, visits to tell her their mother is sick and begs Yuri to come home. Yuri agrees and speaks to her father, who says he stands by his beliefs and has no regrets. Yuri refuses to forgive him, but feels she has achieved closure, and chooses to maintain a relationship with Tsubaki and her mother. Buchio receives his driver's license. Mu-chan discovers Jiro has not yet replaced the damaged barrier, which frustrates her.

In a post-credits scene, a group of students discuss a rumor that a stuffed tanuki in the science room is actually a bake-danuki with a vengeful spirit. Yusuke, an animate anatomical doll, warns the students against spreading dangerous rumors, as the power of kotodama can make them come true. After the students leave, a spirit animates the stuffed tanuki.

Buchio and Chiaki travel to the ocean, where they see an umibozu. Chiaki confides that Kazuhiko has been depressed since his wife's passing and is overly fixated on his own death. This causes Buchio to realize that, as nekomata have longer lifespans than humans, he will outlive his family, which makes him depressed. Chiaki ruminates on Kazuhiko's relationship with his wife, beginning a flashback of their life together. His wife's ancestor was a basho spirit, causing her to become terminally ill when the basho plant died.

Mu-chan helps Jiro weave a new barrier. Jiro states that he has a very good memory, and even remembers events from long ago. He relates a story about Mu-chan's grandmother when she was a young girl, which makes Mu-chan ask about her great-grandmother. This makes Jiro dissociate and flash back to his memories of Mu-chan's great-grandmother, who was named Haru. Mu-chan confesses to Hayachiyo that she loves Jiro, but is upset when he puts himself in danger. Mu-chan's grandmother shows her a photo Jiro took of Haru when she was a young woman.

Sanmoto invites Buchio on a trip to England, where magic is very powerful due to an abundance of ley lines and power spots. Takumi's mother senses Buchio is depressed and affirms that she sees him as a son. In England, Sanmoto reveals the purpose of the trip was to make Buchio confront his fear of loneliness by experiencing separation from his family. After returning to Japan, Buchio has tea with the Nishiyas, and Kazuhiko asks him to take care of Chiaki after he dies. This upsets Chiaki, who wants Kazuhiko to live in the moment. Chiaki reveals that before she died, Kazuhiko's wife asked him to take care of Kazuhiko in her place.

The students believe Ryo and Rain are dating, but Ryo stifles the rumors by acting aloof towards Rain. Jiro searches his storage shed for paper, but discovers it has been infested by mokumokuren. Mu-chan finds an old camera and asks Jiro about the photo of Haru, which causes Jiro to have a panic attack. Jiro apologizes, which upsets Mu-chan due to PTSD from Jiro frequently apologizing before putting himself in danger.

In a flashback, Haru tells Jiro she is engaged, and her mother is excited to see the wedding before she dies. However, Haru's mother dies of illness before the wedding, causing Haru to feel guilty that she could not fulfill her mother's last wish. Later, Haru's son and best friend are killed in an earthquake, and her husband dies in battle during World War 2, causing her to believe she is cursed. Haru dies in a bombing attack, and with her last words asks Jiro to forget her. However, Jiro is unable to forget, causing him to feel that he has betrayed her.

Rain's doctor explains that she is at risk of entering a state of hibernation due to the winter cold, and advises she avoid cold water. Ryo feels guilty for avoiding Rain and wishes to apologize. Ryo's friends drop a soccer ball into the river and Ryo attempts to retrieve it, but falls into a spatial distortion created by the sleeping dragon god. Rain rescues him, but falls into hibernation and cannot escape herself. Jiro attempts to commune with the dragon god to rescue her, but starts to be pulled in as well. Despite his warnings, Mu-chan rallies the children to help him, and together they rescue Rain. Rain awakens in the hospital a week later and Ryo apologizes to her.

Mu-chan chastises Jiro for attempting to do everything himself, and Jiro promises to be less reckless in the future. Jiro confides his difficulty in forgetting Haru, but Mu-chan convinces him to remember her instead. Mu-chan's grandmother finds a letter penned by Haru shortly before her death telling Jiro to disregard her dying wish. Jiro replaces the barrier around the cedar tree and creates a charm from a tree branch and Mu-chan's hakama. In a post-credits scene, the dragon god reawakens during the New Year's festival. The dark shadow reaches for Mu-chan, but she does not notice.

Hayachiyo sees an oni in the forest and visits Isshin, a human musician she is in love with. Mu-chan makes her own charm, which Jiro completes with a bean cooked by his fire magic. Mu-chan is attacked by the dark shadow, but she realizes it is actually the spirit of her father. Jiro is able to convince the shadow to become a Betobeto-san, but he has no memories and is not sapient. The family names him "Ma-san".

Spatial distortions are increasing, leading to rumors that the boundary between parallel worlds is breaking down. This excites Takumi, who interviews two Space-Time Laboratory researchers; however, they refuse to reveal any information. Buchio and Takumi learn that Tagenbo, the village tengu before Tazenbo, sacrificed himself to save the village from a meteorite in the year 1523, and this has some connection to the dimensional rifts. Buchio compliments Takumi on his passion for video-making, but Takumi is disillusioned due to his friends telling him it is difficult to become a successful filmmaker. Buchio, Chiaki, and Takumi travel to Tokyo, where a massive dimensional rift opens in the sky and disgorges a horde of oni.

Oni rampage across Japan while tengu attempt to protect the citizens. Sanmoto is cut off from his avatars spread across Earth, forcing him to revert to a small bat-like form with no powers. Taira and Yuri slay an oni who has boarded their airplane, causing it to crumble into sand. Kazuhiko escapes a group of oni by distracting them with a voice recording of Chiaki. Ma-san leaves the house and is attacked by oni, but Mu-chan rescues him by throwing Jiro's baked bean, which releases Jiro's fire magic and stuns the oni.

Kotodama fades due to the boundary break, causing youkai to weaken and revert to mundane objects. Yusuke and Chiaki become inanimate. Buchio takes human form to save Takumi from an oni attack. Jiro erects a magical barrier to protect the Sugimoto family from oni, but one oni slips through. Mu-chan realizes the oni is composed of her father's memories, which were separated from his soul when he was taken by the void. Using kotodama, she transforms the oni into an image of her father, which awakens Ma-san's ego. The Space-Time Laboratory faces manpower shortages as their youkai members die, and warn that the world is about to be "inverted".

The dragon god dies as youkai across Japan lose their powers. Buchio and Suzu revert to normal cats and die. Rain turns into water and Jiro turns into wind. Takumi, Ryo, and Mu-chan awaken in a white void with no memories. By talking with one another, they remember their loved ones and are able to use kotodama to restore the youkai to life. However, Sanmoto disappears.

Spring break is extended to give the students time to recover from the traumatic events. Takumi decides to pursue his passion for filmmaking. In a meeting with the Tengu Association, Jiro explains the true nature of oni and theorizes that they became dangerous due to kotodama from the erroneous belief they were monsters. Ma-san cannot remember his life as Mu-chan's father, but the Sugimoto family allows him to stay with them. Rain and Ryo confess their feelings for one another. Ma-san goes to Buchio for advice, causing Buchio to become embarrassed when he realizes he is now someone else's mentor. Jiro sees a white-haired infant and realizes they are the reincarnation of the suijin he killed. Takumi's brother teaches him about filmmaking, and Hayachiyo performs a song with Isshin. In a post-credits scene Jiro notes that it is summer once again, ending on a shot of the sky that mirrors the opening of the first episode.