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The story begins with a prologue set in late 1960s Japan. A group of tanuki is threatened by a gigantic and ongoing suburban development project called New Tama, in the Tama Hills on the outskirts of Tokyo. The development is cutting into their forest habitat and dividing their land. As construction continues, the story resumes in early 1990s Japan, during the early years of the Heisei era. With the amount of living space and food decreasing every year, the tanuki begin fighting among themselves for the diminishing resources of their habitat until at the urging of the matriarch Oroku ("Old Fireball"), they decide to unify against the humans to stop the development.
Several prominent tanuki lead the resistance, including the aggressive chief Gonta, the old guru Tsurugame, the wise-woman Oroku, and the young and resourceful Shoukichi. Using their illusion skills (which they must try to re-learn after having mostly lost and forgotten them), they stage a number of diversions including repeated attempts at industrial sabotage. These attacks injure and even kill some people, frightening many construction workers into quitting their jobs, but more workers immediately replace the ones who have been scared away. In desperation, the tanuki send out messengers to seek the help of various legendary elders from faraway regions, while continuing their resistance at home.