Princess Kaguya begins her earthly existence as a minuscule celestial being discovered within a luminous bamboo stalk by a bamboo cutter, who receives her as a divine blessing. She experiences startlingly rapid physical growth, earning the village children's nickname "Takenoko" (Bamboo Shoot) for her conspicuous development. Her early years unfold in the rural countryside, marked by spirited freedom and deep bonds, particularly a profound connection with a village boy named Sutemaru.

Her life transforms drastically when her adoptive father uncovers gold and fine cloth within the bamboo grove, interpreting these as signs of her noble destiny. He relocates the family to the capital, imposing a life of aristocracy upon her. This transition forces her into a constricted existence governed by courtly conventions, involving rigorous instruction in etiquette, music, and comportment under a strict governess. She struggles intensely with these confines, yearning for her former unburdened life and declaring that true existence must include laughter and natural hardship.

Maturing into a woman of exceptional beauty, formally named Princess Kaguya for the radiant life force she embodies, she attracts determined suitors, including five noblemen and the Emperor of Japan. Unwilling to marry, she assigns each nobleman an impossible quest to procure mythical treasures, knowing their endeavors will fail. One suitor perishes in his attempt, causing her deep sorrow. Her rejection of the Emperor's advances precipitates a pivotal moment: overwhelmed by distress, she involuntarily invokes her celestial origins, revealing she is a princess of the Moon.

She explains to her adoptive parents that her presence on Earth resulted from a transgression against lunar laws, leading to her exile for a mortal sojourn. The Emperor's pursuit accelerated the Moon's decision to reclaim her during the next full moon. Despite her profound attachment to Earth—expressed through love for her parents, memories of Sutemaru, and appreciation for Earth's beauty and imperfection—her departure becomes inevitable. In a final earthly act, she seeks out Sutemaru, now living with his own family, sharing a fleeting moment of joy and unrealized love before the Moon's influence tears them apart.

On the night of the full moon, celestial beings descend in a luminous procession to retrieve her. Resisting the erasure of her earthly memories, she passionately declares the wonder and vitality of Earth. Nevertheless, an attendant cloaks her in a feather robe, extinguishing her recollections of mortal life. As she ascends, she casts one final tearful glance toward Earth, leaving her adoptive parents in profound grief. Her celestial nature grants abilities including accelerated growth, control over light and shadow for invisibility, enhanced physical speed, and exceptional learning capacity. Her character embodies themes of autonomy, the tension between societal expectations and personal freedom, and the poignant acceptance of inevitable destiny.