The game starts with someone removing this sword from the cave, thereby releasing Orochi again. Along with it, however, a terrible curse spreads all over the island nation of Nippon, blighting the land and rendering nearly everyone on the island with some sort of affliction from demonic possession. In Kamiki Village, though, the people are saved by the protection of the Konohana Tree and Sakuya, the tree spirit that dwells within it. Sakuya, realizing that this is the work of Orochi, calls upon her powers and reincarnates Amaterasu through the statue of Shiranui in the shrine. Sakuya explains about the situation of the world and humbly asks Amaterasu to set things to rights. However, during her 100 year slumber, Amaterasu has lost most of her powers and Sakuya is not in a very good position to help her due to the fact that the curse has withered most of the Guardian Saplings around the island, from which Sakuya draws her power. Suddenly, a wandering artist, a Piccori by the name of Issun, appears, claiming that he will come along with Amaterasu for his own purposes (we later learn that he merely wanted to come along to steal the brush techniques that Amaterasu learns on her journeys). Sakuya tells Amaterasu that he would prove a useful companion and sends her on her way.
The player plays as Amaterasu as she and Issun travel around the island, gathering information and reclaiming the Celestial Brush strokes (the player is able to enter a special mode where they can actually "paint" and use the brush strokes to affect the game world).
While traveling around, the pair meet Waka, a wandering Tao Master and prophet. He often provides small prophecies for Amaterasu dealing with the tasks that she and Issun need to accomplish, but he also provides for a challenge, as he often times speaks in riddles and even challenges them to fights along the way.
During the course of the game, Amaterasu and Issun manage to reclaim most of her powers through helping individuals take care of matters or defeating agents of Orochi that are trying to kill her for their master. However, Orochi eventually reclaims enough power as to where the legend begins to replay itself and he asks for the sacrifice of Kushi, a young woman in Kamiki. Susano, a village warrior who is a descendant of Nagi (and is actually the cause of Orochi being revived) is asked to go and save her, but in his fear and shame, he refuses. Amaterasu and Issun run off to save her and eventually face him down, defeating him after a long battle (and with the help of a faithfully restored Susano). However, from Orochi's body rises a darkness that heads north. Amaterasu and Issun seemed concerned briefly, but forego their concern for the celebration at the village.
Afterward, they then head north, only to discover that the rest of the island is still cursed. They fight and defeat more agents of darkness, saving the Imperial Capital of Sei-an (but failing to save the Empress, Himiko) and most of Nippon. Finally, the two learn that the answer to all their questions will only be answered in the Northern Country, where demons are said to be born.
They both head there where the player not only finds the land of the wolf people, but the village of the Piccori, Ponc'tan, Issun's home. Wandering around, we learn that the real reason that Issun became a wandering artist was because he had no want to become the Celestial Envoy, one that would spread the word of Amaterasu through his artwork. Issun strongly desires not to talk on the subject and presses them on, though he later reveals that he would rather forge his own path than tell the tale of someone else's like his forefathers have. Eventually, the two arrive at the source of all the troubles they have encountered on their journeys: the Ark of Yamato. According to legend, the Ark is said to have come from space, bearing with it all of the evil things that plague the world. The ark crashed into the lake, and from there, all the demons escaped into the world and began causing all amounts of havoc and chaos around Nippon. After a tearful parting between Amaterasu and Issun, Amaterasu continues on alone, facing all of the collected evil in the ark that returned after it was defeated. Eventually, she is able to reach the inner sanctum of the ship where she confronts Yami, the embodiment of evil itself. She seemingly manages to best the creature, but as she prepares to return to the world, it rises again and strips her of her powers. Only after Issun, who has suddenly had a change of heart about his faith and has been spreading the word of Amaterasu's exploits, manages to gather everyone together and pray for strength is she able to rise again, reclaim her powers and best the evil for good. From there, she and Waka then take the ark and take it back to the Moon Kingdom in the sky.
