A girl dreams she is falling, and semi-angelic beings discover a large cocoon in their home. The girl wakes up inside this cocoon and breaks out of it. The winged people introduce themselves as Haibane, name her "Rakka," and give her a forged halo. One of them, Reki, stays with her as ash-grey, feathered wings grow from her back in a painful way.

Kana tells Rakka not to feed the crows, because they are the only creatures who can leave the city, and if they get too comfortable, they might stop doing so. To explore her own job options, Rakka accompanies Kana to work in a clock tower in the center of town. This, she learns, is the highest point in the city, but the walls around it are higher still.

With winter approaching, Kuu gives Rakka a coat and helps her choose a room to live in. Kuu thanks her for the influence she has been, and Rakka notices that Kuu's halo is flickering. The other Haibane tell Rakka about Kuu's history of trying to imitate her older companions. As night falls, it starts to rain, and Kuu is nowhere to be found.

Rakka continues to hide her wings from the others. Reki helps her move Kuu's bed into her room and they talk about the wall around the town. They take the children to buy winter clothes and a human girl tries to touch Rakka's wings. She flees into the Western Woods, led by the crows, who take her to an old well where she learns about her cocoon dream.

Rakka discovers that Reki's entire studio is painted like her cocoon dream. She gives Reki a box from the Communicator, containing her true name, which fills Reki with despair. She throws Rakka out of the room, confronts a manifestation of herself, and relives her dream. Rakka realizes the truth about Reki's struggle and goes back to save her.