Shangri-La follows the lives of a group of homeless people in Japan who run into a man who nearly commits suicide and decide to help him out of his financial troubles. Using their various ingenious resources they embark on a complex scheme to blackmail a crooked businessman, whose bankruptcy claim has put people out of work. It’s a fun romp as these seemingly homeless people manage to outsmart the very people who cast them from society.

One morning Hikaru Hino, a high school student living in Hakodate, wakes up to find she has grown a tail. She quickly cancels her first date with classmate Hayato, complicating their relationship. Hikaru's sister makes a fake tail to cheer her up and takes her out around town together, but a reporter captures their photo which leads to a huge commotion in Hakodate. As the tale commotion reaches a fever pitch, another person with a tail, Mr. Yoshida, shows up. As a result, the commotion grows into a full-blown incident that involves the whole of Hakodate.