Ten-year-old Chihiro Ogino is on a journey with her parents to their new home when they take an unexpected shortcut. They stumble upon a tunnel that leads to what seems like an abandoned amusement park, which her mother insists on exploring despite Chihiro's unease. Inside, they discover an empty restaurant brimming with delicious food, and her parents quickly indulge. As Chihiro ventures further, she comes across a massive bathhouse and meets a boy named Haku, who urgently advises her to return across the riverbed before sunset. Unfortunately, Chihiro later sees that her parents have been transformed into pigs, and with the river now flooded, escape seems impossible.
Haku comes to her aid and instructs her to seek employment from Kamaji, the bathhouse's enigmatic boiler-man, who has the power to control the susuwatari spirits. Instead, Kamaji sends Chihiro to Yubaba, the bathhouse's witch-like owner who is responsible for her parents' transformation. Although Yubaba initially attempts to scare Chihiro away, she ultimately offers her a work contract. As Chihiro signs, she becomes Sen when Yubaba confiscates the second kanji from her name. This loss makes it hard for her to remember her true identity, and Haku warns her that forgetting her real name could trap her in the spirit world forever.
At the bathhouse, Sen faces the mockery of her fellow workers, aside from Kamaji and Lin, who support her. When she inadvertently invites a mysterious creature known as No-Face into the bathhouse, believing he is a client, events spiral out of control. He begins to demand food from the workers, offering gold coins in return, taken from the river spirit that Sen cleansed for the first time. When Sen rejects the gold and walks away, No-Face's frustration leads him to devour some bathhouse employees.
As chaos unfurls, Sen witnesses paper shikigami attacking a dragon and realizes it is Haku in his transformed state. Following him into Yubaba's penthouse, a shikigami that hitched a ride on her morphs into Yubaba's sister, Zeniba, revealing critical information about a magic golden seal that Haku has stolen, which comes with a curse. During a confrontation, Zeniba vanishes, leading to a dramatic moment with Haku, as Sen provides him with a portion of a magic emetic dumpling to expel the seal.
Determined to fix her mistakes, Sen sets out to return the seal and apologize to Zeniba. In a tense encounter with an ever-hungry No-Face, she feeds him the remainder of the dumpling to regurgitate the workers he previously consumed. With the help of her friend Lin, she escapes the bathhouse along with No-Face and a mouse form of Boh, Yubaba's son, as they journey to Zeniba using train tickets given by Kamaji.
As events unfold, Yubaba almost orders the slaughter of Sen’s parents before Haku reveals Boh’s disappearance and negotiates Sen’s release. Accepting the terms, Sen prepares for a crucial final test to prove her resolve. During her meeting with Zeniba, she receives a magical hairband and learns that Yubaba has used a slug to manipulate Haku. Recalling her past where she fell into the Kohaku River, Sen begins to piece together Haku’s true identity as the river's spirit.
When they arrive back at the bathhouse, Yubaba's final challenge involves identifying her parents among a group of pigs. Sen triumphantly declares that none of the pigs are her parents, leading to the dissolution of her contract and the restoration of her true name. With Haku by her side, they journey back to the riverbed, where he promises to reunite with her. As Chihiro crosses back to her restored parents, she glances back at the tunnel one last time, clutching the hairband from Zeniba, a symbol of her extraordinary adventure.
