Natsume discovers that the heirloom "Book of Friends" that his grandmother, Reiko, gave him possesses the names of the spirits she defeated and bound to her will. Assisted by a cat whom Natsume addresses as Nyanko-Sensei (lit. Master Little Meow), Natsume aims to return all of the names to their rightful owners.

Natsume is visited by the village's local god who is currently fading because of the lack of devotees.

Natsume goes to a hot spring for a school trip, with an errand from Shigeru to pick up teacups from a near by pottery. While there he meets and helps a little fox spirit, who quickly grows attached to him.

Natsume meets a shrine god in the form of an elderly woman. He is forced to help her return a mirror to a youkai said to bring disaster. The youkai turns out to be Reiko, Natsume's grandmother, who the shrine god only mistook as a youkai. Reiko had lent out the mirror so that the shrine god could save the life of an old tree, but the two parted after Reiko learned that the elderly woman was a youkai.