On 21 September 1945, shortly after the end of World War II, a teenage boy named Seita dies of starvation in a Kobe train station. A janitor sorts through his possessions and finds a candy tin, which he throws into a field. The spirit of Seita’s younger sister, Setsuko, springs from the tin and is joined by Seita’s spirit and a cloud of fireflies. They board a train.
Some months earlier, Seita and Setsuko’s house is destroyed in a firebombing along with most of Kobe. They escape unharmed, but their mother dies from severe burns. Seita and Setsuko move in with a distant aunt, who convinces Seita to sell his mother’s silk kimonos for rice. Seita retrieves supplies he buried before the bombing and gives everything to his aunt, save for a tin of Sakuma drops. As rations shrink and the number of refugees in the house grows, the aunt becomes resentful of the children, saying they do nothing to earn the food she prepares.
Seita and Setsuko leave the aunt’s home and move into an abandoned bomb shelter. They release fireflies into the shelter for light. The next day, Setsuko is horrified to find that the insects have died. She buries them in a grave, asking why they and her mother had to die. As they run out of rice, Seita steals from farmers and loots homes during air raids, for which he is beaten. When Setsuko falls ill, Seita takes her to a doctor, who explains that she is suffering from malnutrition.
Desperate, Seita withdraws all the money in their mother’s bank account. As he leaves the bank, he becomes distraught when he learns that Japan has surrendered. He also learns that his father, a captain in the Imperial Japanese Navy, is most likely dead, as most of Japan’s navy has been sunk.
Seita returns to the shelter with a large quantity of food, but finds Setsuko hallucinating – she assumes that a few marbles she finds are the previously mentioned Sakuma drops, and offers Seita rocks, thinking she had just made rice balls. Seita hurries to feed her, but she dies as he finishes preparing the food. Seita cremates Setsuko’s body and her stuffed doll in a straw casket. He carries her ashes in the candy tin along with his father’s photograph.
Seita and Setsuko’s deceased spirits arrive at their destination, healthy and happy. Surrounded by fireflies, the siblings rest on a hilltop bench overlooking the skyline of present-day Kobe.