In the town of Doumori, an imbalance in spiritual forces has made it a gathering place for ghosts, demons, and other malignant spirits known as yokai. Protecting the children of Doumori Elementary School from these supernatural threats is Meisuke Nueno, the homeroom teacher of class 5-3. Known to his students as Nube, he is the only psychic teacher in all of Japan. While normally a gentle, somewhat awkward, and perpetually broke young man, Nube harbors a powerful secret in his left hand, which is possessed by a mighty demon named Kyūki, earning him the title Hell Teacher.

This demonic power, which he calls the Demon's Hand, is his primary weapon against the evil spirits that threaten his students. Nube gained this power through a traumatic childhood incident. As a boy, he was constantly tormented by evil spirits due to his innate spiritual abilities, but his teacher, Minako Sensei, helped him. During a catastrophic exorcism, she sacrificed her own life to help Nube seal the demon Kyūki into his left hand, replacing the hand he had lost. This event drives Nube's unwavering dedication to his students, and when they are in danger, his normally limited power becomes infinite. His students, who initially mock his talk of ghosts and exorcism, quickly learn to trust him. The core group includes the hot-headed but kind transfer student Hiroshi Tateno, the responsible and brave Kyouko Inaba, the occult-obsessed Miki Hosokawa, and their friends Katsuya Kimura and Makoto Kurita.

The series follows an episodic monster-of-the-week format, where a new urban legend, mythological creature, or malevolent spirit disrupts the peace of the school or town. These range from classics like the Rokurokubi, whose necks stretch to incredible lengths, to spirits born from discarded objects and cursed swords. Nube must use his Demon Hand, along with other spiritual tools like sacred beads and the White Robe Sutra, to protect his students. While combat is common, many conflicts are resolved through negotiation, understanding, or teaching the spirit a lesson about its own pain, mirroring Nube’s role as a teacher.

The narrative also develops several recurring allies and rivals. One of the most notable is the beautiful snow woman Yukime, a Yuki-onna who falls in love with Nube after he spares her life, creating a complicated romantic dynamic as he also harbors a crush on his fellow teacher, Ritsuko Takahashi. His primary antagonist is the handsome yet sinister school doctor Kyousuke Tamamo, a powerful nine-tailed fox spirit (kitsune) who seeks to become human through a sinister ritual involving his students. Over time, Tamamo evolves from a straightforward villain into a complex figure whose desire to understand humanity leads him down a different path.

Notable arcs in the story include the initial confrontation with the fox spirit Tamamo, who kidnaps Hiroshi to use in his transformation ritual. Another significant development is Nube's deepening relationship with Yukime, which grows from a mutual respect into a genuine romance that eventually leads to their marriage after he defeats a grim reaper set to claim his life. Later, after a long battle, Nube is able to fully reconcile with the demon Kyūki in his hand, finally freeing the soul of his beloved teacher Minako, allowing her to pass on peacefully. Years later, Nube returns to Doumori Elementary to face new threats, and his former student Kyouko returns as a teacher to assist him.