Natsume Takashi is a teenage boy who has always been able to see spirits, a trait that has isolated him from others and caused him to be misunderstood throughout his life. After the death of his parents, he is passed between relatives and eventually taken in by the Fujiwaras, a kind couple living in a rural town. Natsume discovers a mysterious book in their home, which belonged to his late grandmother, Reiko. Known as the "Book of Friends," it contains the names of numerous spirits that Reiko defeated and bound to her will through contracts. These spirits, or yokai, are now compelled to serve whoever possesses the book.

As Natsume learns more about the Book of Friends, he decides to return the names of the spirits to free them from their contracts. Accompanied by Madara, a powerful yokai who takes the form of a lucky cat and often goes by the nickname Nyanko-sensei, Natsume embarks on a journey to help the spirits regain their freedom. Nyanko-sensei initially agrees to assist Natsume in exchange for inheriting the Book of Friends upon Natsume's death, but over time, their relationship evolves into a genuine partnership and friendship.

Throughout the series, Natsume encounters a wide variety of yokai, each with their own stories, struggles, and connections to Reiko. Some spirits seek their names to regain their autonomy, while others harbor resentment or curiosity about Reiko's legacy. Natsume's compassionate nature often leads him to intervene in the conflicts between humans and yokai, striving to find peaceful resolutions. His interactions with the spirits gradually help him come to terms with his own abilities and the loneliness he has experienced.

In addition to his encounters with yokai, Natsume forms meaningful relationships with the people around him, including his foster parents, classmates, and friends like Tanuma and Taki, who are aware of the supernatural world to varying degrees. These human connections provide a counterbalance to his dealings with spirits, grounding him in the everyday world and offering him a sense of belonging.

The narrative unfolds episodically, with each episode or arc focusing on a specific yokai or situation, while also weaving in overarching themes of identity, family, and the coexistence of humans and spirits. Natsume's journey is one of self-discovery, as he learns to navigate his dual existence between the human and spirit worlds, all while honoring his grandmother's legacy and forging his own path.