Two sisters move to the country with their father in order to be closer to their hospitalized mother, and discover the surrounding trees are inhabited by Totoros, magical spirits of the forest. When the youngest runs away from home, the older sister seeks help from the spirits to find her.

Karin has lived alone in a secluded mountain village with her consumptive mother since her father died. Her worried grandfather advises her to send her mother to a sanatorium and be adopted by him, although she refuses to accept. On the Buddhist All Soul’s Day Festival in August, a messenger from her grandfather pays a sudden visit to her house.