Princess Mononoke follows the journey of the last Emishi prince,[2] Ashitaka, and his attempts to make peace between the human settlement, Irontown, and the creatures living in the surrounding forest.
The film begins with Ashitaka saving his village from an assault by killing the demon form of the boar god Nago. During the fight, Ashitaka receives a demon mark on his right arm, and he is cursed by the Boar God's hatred and pain. Ashitaka is told that the mark will spread throughout his body, killing him. A ball of iron is found inside Nago's corpse, which is somehow connected to the curse. Ashitaka resolves to journey to Nago's origin, the lands to the West, to try and find a cure for his curse. He cuts his hair, signifying his permanent departure from his village,[3] and rides out with his steed Yakul, his loyal red elk. Since it was considered taboo to see off one who is banished, only one person dared to say goodbye to Ashitaka: his 'little sister,' Kaya (according to Miyazaki, actually his bride-to-be; calling herself his 'little sister' was a term of affection[4]), who gives him her crystal dagger so that he would not forget her.
Having traveled some distance, Ashitaka arrives in a forest full of animal gods, including the wolf god Moro. Also in the forest is the Forest Spirit, described as a "god of life and death", which takes the form of a deer during the day and a "night-walker" at night. The forest lays beside a human settlement called Irontown, a settlement which clears the forest to get to more iron ore, causing many battles as the animals attempt to protect their forest. It was during one of these battles that Irontown's leader, Lady Eboshi Gozen, shot Nago.
During the film Ashitaka travels between the forest and Irontown several times, trying to make peace. During Ashitaka's first visit, the village is attacked by San, a human girl who has been adopted by the wolves. Ashitaka intervenes to stop the two sides fighting and takes San back to the forest, but is injured in the process. With San's intervention, he is healed of his wounds — but not his curse — by the forest spirit.
Under the influence of Jigo, Eboshi sets out to destroy the Forest Spirit. The head of the Forest Spirit is believed to grant immortality; Jigo plans to give the head to the emperor; in return the emperor promises to give Irontown legal protection against the envious daimyos coveting the town's prosperity.
Despite Ashitaka's efforts, Eboshi succeeds in cutting off the Forest Spirit's head while it is transforming. Jigo collects the head while the body is transformed into a god of death, which covers the land in a lethal black ooze, completely destroying the forest and turning the land barren. To stop the ooze from reaching the villagers, Ashitaka and San take the head from Jigo. By returning the head to the Forest Spirit, the land becomes green again and Ashitaka's curse is finally lifted.