The story is set in a time when animal gods coexist with humans. Animal demons, gods who have fallen prey to their own fear and anger, are a danger to everyone, turning those they touch into eventual mindless demons like themselves. One such demon approaches Prince Ashitaka's village, and the prince takes it upon himself to defeat the attacker. He kills the boar demon but is also scarred by its touch. The wise woman foresees that the wound will eventually kill him, and sends him on a journey to the west to "see with eyes unclouded by hate."

After traveling far to the west on the back of his faithful red elk, Yakul, Ashitaka discovers two injured men by a river. The two men, from the nearby Iron Town, had been traveling with other townsmen to bring rice back to the town when they were attacked by the wolf clan. Ashitaka brings them back to their home through parts of the forest that had been thought forbidden. He is cautiously welcomed by the townspeople. As he learns more about the town, he becomes more upset by what he sees, learning that the townspeople are in an ongoing conflict with the forest gods. Wanting to mine under the forest, the people fell trees and attack the gods with guns.

One night, the wolf clan sends an attacker to the town. The intruder is none other than the young human girl San, raised by wolves. Her one aim is to kill the village leader Lady Eboshi. Lady Eboshi is nowhere near defenseless, however, and the two engage in battle in the midst of the village. Ashitaka, with demonic strength in his cursed arm, stops the fight by knocking them both out and carrying San out of the town.

The prince soon finds a full-blown war brewing between the forest dieties and townspeople, brute strength and numbers against firepower. Moreover, while Lady Eboshi is away to retrieve the Forest Spirit's head, the warlord Lord Asano sends warriors to take over the prospering Iron Town. Ashitaka can take no sides and yet cannot convince anyone to stop fighting...

Must watch to find out the rest! ^_^