The film opens with Ogino Chihiro and her parents on the final stages of moving to their new home. On route to their new home Chihiro’s father takes a shortcut that takes them to the spirit world. Her father insists on exploring their strange surroundings, even though Chihiro vehemently opposes it, and when they come across an empty restaurant stall filled with food her parents unwisely decide to help themselves to the spread, devouring the food with abandon. Disgusted, she leaves them and ends up in a magnificent, multi-level public bathhouse. Here she meets Haku, a mysterious young boy who warns her to return across the river before dusk. Chihiro heeds his warning but finds that her parents have turned into pigs and that the river has now swollen into a raging rapid, trapping her in the spirit world. Haku finds Chihiro and decides to help her out. She approaches the bathhouse’s boiler-operator, Kamaji, a spider-spirit, to request him to give Chihiro work and lodging. Kamaji refuses and asks Lin, one of the bathhouse staff to send Chihiro to Yubaba, the witch and proprietor of the bathhouse. Yubaba meets Chihiro and tries to intimidate her but she bravely stands her ground, impressing the old witch. She gives Chihiro a contract but takes her name as a bond renaming her “Sen.” In taking her name, little by little she begins to forget herself and Haku warns her that if she forgets herself completely she will stay in the spirit world, trapped, forever.
Sen tries her best to integrate into the bathhouse but encounters discrimination from the other spirit beings because she’s a little human girl. On her first few days on the job she innocently invites a mute spirit called “No-Face” into the bathhouse thinking him to be another regular. Once inside, he disappears from Sen’s notice, and immediately she is called to assist in serving a “stink spirit”--a sentient pile of garbage and goo. In attending to the stink spirit she learns that he was actually a river spirit, corrupted over the years by human pollution. She manages to clean him up restoring him to his former glory in appreciation for her service she leaves Sen a powerful magic purgative pill. While all this is happening No-Face, has become exceedingly popular with the bathhouse staff as he tips them with gold nuggets. He demands copious amounts of food and wine, tipping lavishly with every order. Hoping to be tipped just a bit more, two bathhouse attendants hang around a bit longer but end up getting swallowed whole by No-Face.
While contemplating the day’s events Sen sees a Japanese dragon being swarmed by paper manikins. She recognizes the dragon as Haku’s true spirit form and he barely manages to defend himself hurtling into Yubaba’s chambers, badly wounded. Sen chases after him to assist him not knowing that one of the manikins has hitched a ride on her. The stowaway reveals itself to be Zeniba, Yubaba’s twin sister. She kidnaps Boh, Yubaba’s giant infant son by transforming him into a mouse and creating a decoy baby from one of the Daruma heads that populate his nursery; she also turns Yubaba’s spy harpy into a tiny bird to keep it from reporting to it’s mistress. Zeniba informs Sen that Haku is ill because he had stolen an enchanted seal from her and swallowed it. She warns her that her golden seal is protected by powerful magic that would eventually kill Haku if not removed from him. While they talk Haku regains some of his strength attempts a hasty escape but Sen hangs on to him and they crash into the Kamaji’s boiler room. Sen feeds Haku half of the magic pill given to her by the river spirit causing him to retch up the seal along with a black blob--the curse that Zeniba warns Sen about. She steps on the blob releasing Haku from the curse. Haku reverts to his human form and recuperates while Sen determines to return Zeniba’s seal and apologize for Haku’s deeds. Before making the journey though Sen opposes No-Face, who has grown to the size of a small room from all the food and bathhouse staff he has swallowed. Sen bravely feeds him the other half of the magic pill and runs out of the bathhouse with No-Face chasing after her. While pursuing Sen No-Face vomits up everything and everyone he has eaten. Having been fully purged, No-Face regains his senses. Sen, the transformed Boh, harpy, and No-Face take the train to see Zeniba to make good with her resolve.
Yubaba on the other hand, furious at the Sen’s undeclared departure orders that her parents be slaughtered. Haku prevents this though by declaring that Boh is missing. In a panic, Yubaba finally sees through and undoes the enchantment placed on the Daruma heads. Haku offers to retrieve Boh on the condition that Yubaba releases both Sen and her parents. She consents to this but only if Sen can pass a test. Meanwhile, Sen and the others finally meet up with Zeniba who reveals herself to be a kind individual unlike her twin. She reveals that Yubaba had stolen the enchanted gold seal from her and used the black slug to control Haku and that it was Sen’s love for Haku that broke Yubaba’s curse on him. Shortly after this revelation Haku arrives at Zeniba’s home in his draconic form to bring the transformed Boh, the harpy, and Sen back to the bathhouse to face Yuababa’s trial. No-Face opts to stay with Zeniba to serve her. Riding on Haku’s back on route home Sen suddenly remembers falling into the Kohaku River as a child yet mysteriously getting to shore unharmed. She then makes the connection that Haku is the spirit of the Kohaku river thus solving the mystery of his identity. Haku, like Sen, had his name and identity stripped by Yubaba.
Upon returning to Yuababa’s bathhouse, Sen is immediately challenged to identify her parents from a whole herd of swine. If she identifies them correctly Yubaba will release them from her curse and allow them all to return to the human world. Sen replies that none of the pigs presented to her are her parents; Yubaba begrudgingly complies with her end of the bargain and her magic contract burns up and her name and memories are restored. Yubaba tells Sen/Chihiro that her parents will rejoin her once she gets past the river--the boundary between the human and the spirit world--Haku escorts Sen/Chihiro to ensure her safety, say a proper good-bye, and a promise that their paths will cross again some day. Once past the now dry river bed, Sen/Chihiro, meet up with her parents--now restored to their human forms--unable to recall having been turned into pigs or Yubaba. They make their way back to the car--coated in dust and dry leaves indicating that they had been gone for some time--but before they get in Sen/Chihiro takes a lingering last look at the path she had come from.
