"Kiitaro's Yokai Picture Diary" centers on Kiitaro, a young boy who moves to his grandmother's house in the countryside after his parents relocate for work. The house, situated near a forest, is inhabited by various yokai, supernatural creatures from Japanese folklore. Kiitaro, initially unaware of their presence, soon discovers that he can see and interact with these beings. The yokai, ranging from mischievous to benevolent, form a quirky community that coexists with humans in subtle ways.

The narrative unfolds through episodic adventures, with each episode focusing on Kiitaro's interactions with different yokai. These encounters often highlight themes of friendship, understanding, and the blending of the human and supernatural worlds. Kiitaro's grandmother, a knowledgeable and kind figure, occasionally provides insights into the yokai's origins and behaviors, adding depth to the lore.

Key yokai characters include Nezumi-otoko, a rat-like yokai with a penchant for pranks; Nurikabe, a wall-like yokai that blocks paths; and Kappa, a water-dwelling yokai with a mischievous yet honorable nature. Each yokai has distinct traits and quirks, contributing to the series' charm and humor. Kiitaro's growing bond with these creatures forms the emotional core of the story, as he learns to navigate their world while maintaining his human connections.

The series balances lighthearted moments with occasional poignant reflections on coexistence and acceptance. The rural setting, with its lush landscapes and traditional Japanese elements, serves as a fitting backdrop for the yokai's antics and Kiitaro's adventures. Through its episodic structure and focus on character interactions, "Kiitaro's Yokai Picture Diary" offers a gentle exploration of folklore, community, and the unseen world that exists alongside humanity.