Hat is a 10-year-old human boy who journeys to Usontō island with his parents, both researchers investigating legends of the Underworld. His archaeologist father aims to study the area near a large volcano, site of the ancient hero Magical Hat's battle against demonic forces. When an earthquake strikes, Hat plunges into the volcano, accidentally shattering the magical seal containing the Underworld.

Within the Underworld, Hat encounters Guwaru the Ziarc, locked in a power struggle with King Aleph. Guwaru banishes Aleph and fractures Usontō into seven islands. Hat discovers a statue holding the spirit of Magical Hat and learns he is the legendary hero's direct descendant. Accepting his destiny as the hero's reincarnation, he vows to defeat Guwaru, reunify the continent, and restore King Aleph.

Transforming into the new Magical Hat grants him powerful magic channeled through a turban he wears. This turban is vital against Guwaru's forces, and its theft by Guwaru would bring catastrophe. Hat relies on companions including Hoto-ken (the canine Prince of the Underworld and Aleph's son), Old Man Tau (Aleph's younger brother), Spin (a resourceful teenage girl), and Roboggu (Old Man Tau's transformable egg-shaped robot).

His primary enemies are Guwaru and Guwaru's son, Kowaru the Ziarc, who constantly plot to steal the turban. Hat's design was inspired by Fuji TV's Yume Kōjō '87 mascot, Imajin. Hat evolves from an ordinary boy into a determined hero, wielding his inherited magic and his allies' support to confront threats and pursue his quest to reunify the fractured islands.