Natsume Yūjin-Chō centers on Takashi Natsume, a teenage boy who has inherited the ability to see yokai, supernatural beings invisible to most humans. This ability stems from his grandmother, Reiko Natsume, who was also a yokai seer. Reiko, ostracized by both humans and yokai, spent her life challenging yokai to games and collecting their names in a book known as the "Book of Friends." Upon her death, the book was passed down to Takashi, who becomes the target of various yokai seeking to reclaim their names or exploit the book's power.

Takashi, having grown up lonely and misunderstood due to his ability, initially views the Book of Friends as a burden. However, after encountering a powerful yokai named Madara, who takes the form of a lucky cat (Nyanko-sensei), Takashi begins to reconsider his relationship with the yokai world. Nyanko-sensei agrees to act as Takashi's bodyguard in exchange for inheriting the Book of Friends upon Takashi's death. Together, they embark on a journey to return the names in the book to their rightful owners, freeing the yokai from Reiko's contracts.

Throughout the series, Takashi encounters a variety of yokai, each with their own stories, struggles, and connections to Reiko. These encounters often reveal the complexities of the yokai world, blending themes of loneliness, friendship, and the coexistence of humans and supernatural beings. Takashi's interactions with yokai gradually help him come to terms with his own past and his grandmother's legacy, fostering a sense of empathy and understanding.

The narrative also explores Takashi's relationships with the human world, particularly his foster family, the Fujiwaras, who provide him with a sense of belonging and warmth. Additionally, Takashi forms friendships with classmates like Shigeru and Taki, who become aware of his abilities and support him in his endeavors. The series balances episodic yokai encounters with overarching character development, creating a heartfelt and introspective exploration of identity, connection, and the boundaries between worlds.