"Pastel Memories" is set in a near-future Tokyo where otaku culture has significantly declined, leading to the closure of many stores in Akihabara. The story centers around Izumi Amagi, a high school girl who works at a small shop called "Rabbit Hutch," which specializes in selling and repairing old anime, manga, and game merchandise. The shop is struggling to stay afloat due to the waning interest in otaku culture. One day, Izumi discovers a mysterious book in the shop's storage room, which transports her and her friends into a virtual world where they must fight to restore the fading memories of otaku culture.

The virtual world is populated by characters and settings inspired by classic anime, manga, and games, each representing a fragment of otaku history. Izumi and her friends, including the energetic Miku Hinasaki, the reserved Yuu Mashiro, and the tech-savvy Ayame Sawatari, form a team to combat the "Shadows," entities that seek to erase these cultural memories. As they progress, they uncover the origins of the Shadows and the true purpose of the virtual world, which is tied to the preservation of otaku heritage.

The narrative explores themes of nostalgia, the importance of cultural preservation, and the bonds formed through shared interests. Each character brings unique skills and perspectives to the team, contributing to their collective mission. The series balances action sequences with moments of character development, highlighting the personal growth of the protagonists as they confront challenges both in the virtual world and in their real lives. The resolution ties together the fate of Rabbit Hutch and the broader otaku community, emphasizing the enduring impact of cultural artifacts and the power of collective memory.