In the aftermath of World War II in Japan, Professor Tatsuo Kusakabe and his two daughters, Satsuki (about ten years old) and Mei (four years old), move into an old house located near the hospital where their mother, Yasuko, is recuperating from a prolonged illness. This residence, steeped in mystery, is inhabited by whimsical spirits known as susuwatari that appear when shifting from illuminated areas to shadowy corners. During their exploration, Mei encounters two tiny entities that guide her to the hollow of a gigantic camphor tree, where she forges an extraordinary friendship with a larger spirit that introduces itself with deep, rumbling sounds Mei interprets as "Totoro." Believing that Totoro is the mythical character from her storybook, Three Billy Goats Gruff, Mei drifts into slumber on this majestic being, only to awaken on the ground when Satsuki finds her. Despite her best efforts, Mei cannot convey the existence of Totoro to her family, but Tatsuo reassures her that Totoro will choose to reveal himself when the time is right.
While waiting for their father's delayed bus, Mei dozes on Satsuki's back. It is then that Totoro appears beside them, giving Satsuki her first glimpse of this enchanting creature, who sports a delicate leaf atop his head as a rain shield. Touched by Satsuki's concern, Totoro graciously accepts her umbrella and rewards her kindness with a collection of nuts and seeds. Soon after, a massive, cat-shaped "bus" arrives, and Totoro boards, vanishing into the distance.
Days pass, and after Mei plants the seeds gifted by Totoro, the sisters wake in the middle of the night to witness an extraordinary scene: Totoro and his spirit companions are conducting a mesmerizing dance around the newly sown seeds. The girls join in the celebrations, causing the seeds to sprout into an enormous tree that reaches for the sky. As the night unfolds, Totoro takes the sisters on a thrilling adventure on a magical, airborne top. By morning, although the tree has faded away, the seeds begin to sprout, hinting at future enchantments for this loving family and their mystical friends.
However, calmness is shattered when Mei discovers that her mother's visit has been postponed due to a setback in her treatment. This distressing news leads to turbulence between the sisters, resulting in a fierce argument. In an effort to bring comfort to her mother, Mei embarks on a quest to the hospital, carrying fresh corn as a symbol of her affection. Unfortunately, her determination to reach her mother leads her into a labyrinth of confusion, where she finds herself lost.
As night descends, Satsuki is gripped by panic and dread, fearing for Mei's safety. With the neighbors rallying to search for the missing girl, Satsuki turns to the mystical realm of Totoro. Responding to her heartfelt plea, Totoro calls upon the mysterious Catbus, a magical vehicle that whisks Satsuki away on an otherworldly quest, eventually reuniting her with Mei in a heartwarming display of sisterly love.
Once the tumult of emotions settles, the girls learn that their mother's health is stabilizing, thanks to a minor cold. In a tender show of love, they secretly place an ear of corn on the hospital windowsill, delighting their parents when they discover it. With the family once again whole and their mother's health on the mend, both Mei and Satsuki finally return home. Surrounded by the gentle watch of Totoro and his forest companions, the girls rediscover the simple joys of childhood. As the seasons change and life resumes its tranquil pace, the sisters find comfort in each other’s company, their bond deepened by the remarkable adventures and challenges they have faced together.
