The man, Mizuki, is led down a hallway by an older gentleman, in a funk about the whole eyeballs-in-a-box thing. "Do you believe in ghosts?" the older man asks. Before Mizuki can sigh and walk away in disgust, he's led into a hospital room where a polite green skeleton is staying. Mizuki is horrified of the ghost, who really looks more like a zombie, even as the zombie-ghost pours a cup of tea and offers it to him. He really seems like a decent guy.
Mizuki rides a train and somehow sees a flashback to a scene he wasn't a part of. One unnamed doctor tells another that 'these patients' have no pulse, heartbeat, or body heat. It's like they're dead, but, like, not. "If the public discovers that patients at a civic hospital are becoming ghosts, we'll have a big problem on our hands," someone says. Mizuki is a part of a private investigation into how these ghosts came to be, and has been given the address of 'a few potential suspects.' What Mizuki's actual job is, who hired him, how they know about these suspects - or anything else, really - is not explained. What is explained, is that the address Mizuki was given, is the same as his. I guess the disembodied boss man missed that part.
Later, at home with his mom, Mizuki looks out the window to see two 'hitodamas' (human souls taking the form of fireballs - Wikipedia!) fly into the air. He runs after them and sees them duck behind that old temple that voice from last night mentioned. Without hesitating nearly long enough, he enters the temple to investigate, finding a room with a lit candle perched atop a skull. As he stares at the flame, a scary looking woman who might as well be out of a Tod Browning movie comes out behind him. Again, Mizuki is horrified, even though the freaky woman is really nice. She even offers him a spoonful of frog eyes. He freaks out and tries to run away, only to get caught by a mummy. The mummy picks Mizuki up and tells him to calm the fuck down. The mummy's a decent fellow, too.
The three sit down and the mummy explains that those of the Ghost Tribe hate to fight. "Ghost Tribe?" Mizuki asks. "The Ghost Tribe lived a peaceful existence on Earth long before the dawn of man. But then the humans appeared..." And we fucked everything up. Again! Humans, being the bastards we are, chased the Ghost Tribe underground, where they had to hide during the day. At night, desperate for food, they'd come to the human world and hunt "frogs and crickets." Frogs and crickets? These are the worst hellish man-beasts ever. The only members left of the Ghost Tribe happen to be Mrs. Freak and Mr. Mummy. And just to make things worse for these overly nice monsters, Mr. Mummy contracted some sort of ghost-sickness. The two have come to the human world seeking a cure. They even went to a hospital, where Mrs. Freak gave some of her 'power' to two dying patients so they wouldn't suffer. Hence the ghost-zombie. Upon hearing this, Mizuki informs them that he's going to have to report them for... turning people into ghosts. Mr. Mummy begs Mizuki to forget he ever saw them, saying that if people find out about them, they'll be killed. He even cries a little. Pussy monster-things. Mrs. Freak tells Mizuki that she's pregnant, and asks that he at least wait until she gives birth to have them killed for being different fron everyone else. Mr. Mummy continues to beg Mizuki to keep quiet, but then his elbow turns into a purple mist and his arm falls off. Because of the sickness? I'unno. But Mizuki runs the hell away.
Mizuki debates whether or not to report the Ghost Tribe people. It turns out to be a moot point, however, as the ghosts in the hospital faded away to a green ash. So, I guess no one cares now. As Mizuki walks home he asks himself, "Even ghosts die?" Then, in a panic, he wonders what happened to the Ghost Tribe couple. He runs to the temple to find the two dead on the floor. "The Ghost Tribe is finished!" he says to the corpses. They've probably figured that out already.
Leaving the dried out husk of Mr. Mummy, Mizuki takes Mrs. Freak to a graveyard and buries her. As he walks away, the wind picks up and he hears a baby cry. From the mound of dirt where he buried the woman, a baby digs himself out. You know... anime is kind of fucked up.
The baby crawls to Mizuki, who falls over, gasping for air. He considers killing the 'monster' wondering what horror he'll bring to the world. The baby crawls on top of Mizuki and touches his nose, in a cute-ish, baby sort of way. Mizuki, as he's wont to do, runs away in fear. As he does, we see bits of the baby rolling on the ground after Mizuki presumably threw the kid off. The baby cries next to the corner of a bloody tombstone, bleeding from where his left eye used to be. Hearing his son's cries, the left eye of Mr. Mummy falls out, grows a tiny body, and runs to comfort the baby. Mr. Mummy-Daddy-Eye names the child Kitaro, ties a leash around him, and drags him out of the rain, explaining that he's the last survivor of the Ghost Tribe.
Mizuki returns to the graveyard and looks at the bloody tombstone. He feels... something. Probably.
Elsewhere, Daddy-Eye sits Kitaro down and runs off to find his son some clothes. Kitaro immediately crawls off and wanders in Mizuki's house, where Mizuki is sitting, wondering what he should have done. Probably not toss a baby eye-first into a sharp surface. Next thing we see is Kitaro licking Mizuki's hand with a smile and one big-ass eye. You know... anime is kind of REALLY fucked up. Mizuki decides that he'll take in the baby, because he's just a baby and he poked his eye out and stuff. Daddy-Eye approves from outside.
Years later, Kitaro is a freak who scares the locals and walks real slow in big sandals. A woman spies Kitaro in an alleyway, apparently talking to himself. She can't see the tiny, bebodied eye talking to him. Daddy-Eye is telling his son he has to live with the humans, since he's the last of the Tribe and all. Kitaro isn't so keen on the idea. And neither is Mizuki's mother. Back home, she tells Mizuki that she wishes they could just send him somewhere.
That night, Kitaro sneaks out and Mizuki follows him. He hears Kitaro talking to his father, but Mizuki doesn't see anyone with the kid. Mizuki follows Kitaro to a wooded area, where he sinks into the ground. Mizuki digs into the earth trying to find the boy, but comes up emptyhanded. He waits back at his house for Kitaro to come home, and watches Kitaro slip a piece of paper in a crack in the wall. He gets fatherly with the child and asks where he was all night. Kitaro gives a smug smile and asks for his ticket back, saying it's a place humans can't go. Mizuki says he's keeping the ticket, and Kitaro stands in the hallway stunned.
Mizuki runs out to the spot he saw Kitaro sink into the ground, ticket in hand. As he gets to the spot, he too sinks into the dirt. Kitaro looks on from behind a tree, his big eye being all big and surprised. Mizuki falls through the ground into a cavern. A barrel moves and a zombie-ghost pokes his head out and asks for the ticket. Unfazed, for some reason, Mizuki complies. The zombie-ghost is surprised the ticket is real; "You'd usually have to wait until you died," to get one. The zombie-ghost steps out of the barrel and tells Mizuki that it doesn't really matter if he's alive or dead, it's his job to give ticket-holders the tour. Mizuki says that there's really no need, since he'll be going back now. However, the ticket is one-way. "Welcome to Hell."
Mizuki's mother, distraught over her son's disappearance, is visiting an old woman who looks a lot like someone who should be a member of the Ghost Tribe. She tells Unnamed Mother Lady that her son is no longer a part of this world, and that a Mononoke (spirit, ghost, what have you) is responsible. Mother Lady knows instantly that Kitaro is the one responsible, and asks what she must do.
Kitaro is talking to his father in the graveyard when Mother Lady runs up to him and demands he take her to where her son is, even after Kitaro tells her she won't be coming back. Daddy-Eye comes out of hiding to present Mother Lady with another ticket, since, "Any mother would want to see her son..." The Eye and Son lead Mother Lady to weird, skull-cliff and tell her to take a ladder down to find her son. Breathing heavily, Mother Lady flashbacks so we can hear the weird woman say, "The only way to escape from a Mononoke is to push them down into Hell." With a shove, Kitaro falls down off the cliff, as weak, deformed children in 300 would. He screams and fades away into the mist far below. Believing her son avenged, Mother Lady laughs maniacally as her hair turns white. A policeman runs up behind her and asks her what's going on. She points and tells him she pushed a spirit off the cliff, but it's revealed that she's standing in the graveyard and probably crazy.
Kitaro, alive and well... or whatever, walks through a forest with Daddy-Eye on his shoulder. "Father, I guess humans are a little bit interesting, after all."