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 Tama New Town, 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 contemporary (early-90s) Japan where, 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 personage 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. All these temporary victories amount to nothing, however, as more workers immediately replace the ones who've 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.After several years, one of the messengers returns bringing a trio of Tanuki elders from the distant island of Shikoku (where development is much less of a problem and (or perhaps because) the Tanuki there were still worshipped much more actively). In an all-out effort at re-establishing respect for the supernatural, the entire group stages a massive "ghost parade" to make the human residents think the growing town is haunted. The strain of the massive illusion kills one of the elders, and the effort seems wasted when the owner of a nearby theme park falsely takes credit for the parade, claiming it was all just a publicity stunt.With this tremendous setback, the unity of the Tanuki finally fails and they break up into smaller groups, each following a different strategy. One group led by Gonta takes the route of eco-terrorism, holding off workers for a time until they are eventually wiped out in a pitched battle with the police (pictured above). Another group of Tanuki including Tsurugame and Oroku desperately attempt an option that was previously unthinkable; they arrange for television coverage and publicly reveal themselves to the media to plead their case against the destruction of their habitat. One of the two surviving elders goes senile and starts a cult among the Tanuki who are unable to transform, eventually sailing away with them in a treasure-ship that takes them all to their deaths, while the other elder investigates the possibility of joining the human world as the last of the transforming foxes (kitsune) did before them.When all efforts fail, in a last moving act of defiance, the remaining Tanuki stage one last grand illusion, temporarily transforming the urbanized land back into its pristine state to remind everyone (including themselves) of exactly what has been lost. Finally, their strength exhausted, the Tanuki most trained in illusion are left with no choice but to follow the example of the kitsune and abandon those of them who can't transform, to disperse and blend into the human society. And while the media appeal came too late to stop the construction, the favourable public reaction pushed the developers to at least include some parks for the few "normal" Tanuki left.In a touching coda to the story, one day Shoukichi, who also joined the human world, is coming home from work when he sees another Tanuki running toward a golf course to meet his companions. Overjoyed, Shoukichi follows and joyfully transforms back into a Tanuki to join in the gathering. In an emotional final scene, Shoukichi's friend, Ponkichi (pictured below) addresses the viewer, asking humans to be more considerate of Tanuki and other animals less endowed with transformation skills, and not to destroy their living space.