Young women in Japan are vanishing one after another on rainy nights, each having heard the cursed melody of the Kagome Cage Song before disappearing. Kitaro, a half-human, half-yokai who serves as a bridge between the spirit world and humanity, investigates these mysterious cases with his companions. They encounter Kaede Hiramoto, a high school girl who has also heard the song and now finds herself marked by the same curse. With the help of the librarian at the Yokai Library, Kitaro learns that the disappearances are caused by a powerful yokai released from a thousand years of magical imprisonment. To save Kaede before her soul is claimed within 48 hours, Kitaro and his friends must locate five ancient musical instruments scattered across Japan and perform a ritual to seal the evil yokai once more.

The quest sends the group across the country to three distinct locations based on an ancient map. Kitaro and Kaede travel to the sacred mountain in Hakone representing sky, Cat-girl and the odious but occasionally helpful Ratman search the land of Mount Takao, while Sand Witch and Old Cry Baby head to the ocean off the Miura Peninsula. As they race against time, Kaede learns the truth behind the millennium curse. The ritual was originally performed by a group of demon-slaying monks called the Black Sorcerers, who imprisoned a mermaid known as Watery Witch after she fell in love with and married a human fisherman named Umihito. The villagers, disapproving of their union, summoned the monks to separate the couple forever. Kaede discovers that one of the Black Sorcerers was her own ancestor, making her the last in the bloodline tied to this ancient injustice.

Complicating their mission is the emergence of Nurari, a sinister and powerful yokai leader who has harbored a grudge against humanity for centuries over their betrayal of the spirit world and destruction of nature. From the shadows, Nurari manipulates events and dispatches Yasha, a cold-blooded yokai assassin from a foreign land who carries a guitar that fires sharp arrows, to eliminate Kitaro and his allies. Nurari attempts to sway Kitaro by revealing a secret about the destruction of Kitaro's own ghost tribe at the hands of humans, questioning where the half-yokai hero's true loyalties should lie. As Kitaro struggles with his dual identity and the weight of human cruelty against yokai, Watery Witch herself is revealed not as a purely evil entity but as a tragic figure whose curse stems from a forbidden love and betrayal a thousand years ago. Kaede, who initially blamed the yokai for her fate, must come to terms with humanitys role in creating the curse that now threatens her life. The film builds toward a confrontation where Kitaro must shatter the cycle of hatred between humans and yokai, free Watery Witch from her suffering, protect Kaede, and stop Nurari from unleashing a plan that would exterminate all of mankind.