"Hello Kitty no Happy! Kasō Taikai" centers around Hello Kitty and her friends as they participate in a grand costume competition. The narrative unfolds as the characters prepare for the event, showcasing their creativity and teamwork. Each character designs and crafts unique costumes, reflecting their personalities and interests. The competition serves as the primary setting, with various challenges and performances that highlight the characters' talents and camaraderie.

Hello Kitty, the central figure, embodies kindness and determination, often encouraging her friends to do their best. Her close companions, including My Melody, Keroppi, and Badtz-Maru, each bring distinct traits to the story. My Melody is gentle and supportive, Keroppi is energetic and playful, while Badtz-Maru adds a mischievous yet endearing dynamic. Together, they navigate the ups and downs of the competition, learning valuable lessons about friendship, perseverance, and self-expression.

The plot progresses through a series of episodic challenges, where the characters face obstacles such as time constraints, creative blocks, and rivalries. These moments are balanced with lighthearted interactions and humorous situations, maintaining a cheerful tone throughout. The climax of the series occurs during the final round of the competition, where the characters showcase their completed costumes in a grand performance. The resolution emphasizes the importance of effort and collaboration over winning, reinforcing the series' themes of positivity and unity.