While walking around town one day, 5th grader Amano Keita notices a bizarre capsule toy machine in the woods and decides to buy a toy. But when he opens the capsule he receives, a ghostly creature named Whisper materializes. Impressed that Keita neither ran away nor bombarded him with questions, he decides to give Keita the Youkai Watch. The watch is a device that allows the wearer to see youkai, which are fantastical creatures, each type possessing different kinds of magical abilities, and which are normally invisible to humans. The Youkai Watch also allows the wearer to summon any youkai he has befriended, enabling the wearer to make use of the youkai's powers. Using it, Keita and Whisper encounter many mischievous youkai around town, resolving the trouble they're causing and befriending many at the same time.