Shakugan no Shana details an age-old conflict between those who inhabit the Crimson Realm, a parallel universe to the human world. The Crimson Realm is populated by Crimson Denizens who are able to manipulate Power of Existence, a fundamental power within any biological entity and functions as "fuel" for one's existence. Denizens whose power stands out among their peers are known as Lords of the Crimson Realm, and Lords that are even more powerful are known as Gods. Denizens who do not care about the balance between the Crimson Realm and the human world collect Power of Existence from humans to use for their own purposes. Some Lords contract with humans to become a Flame Haze, whose duty is to maintain the two world's balance by destroying any Denizens disrupting it. Denizens and Flame Haze fight with the use of powerful magic spells called Powers of Unrestraint, also known as Unrestricted Spells or Unrestricted Methods. One such spell is the Seal, which creates a space where the Crimson Realm and the human world intermingle and time stops.
The story largely takes place in Misaki City in Japan and begins when high school student Yuji Sakai is thrown into the middle of this conflict and encounters a Flame Haze girl with flaming red eyes and hair dressed in all black wielding a katana. The girl informs him that he died some time ago, and that he is a Torch, a human with greatly diminished Power of Existence, and whose remaining Power of Existence will slowly run out. In addition, Yuji is a special kind of Torch who can move within Seals known as a Mystes who contains a Treasure Tool, a magical object created by Denizens that can provide special abilities or even Powers of Unrestraint. Unfazed by his apparent death, Yuji befriends the girl and names her "Shana" after her sword. They later discover that the Treasure Tool within Yuji is the Reiji Maigo, which restores his Power of Existence every night at midnight.
As time goes on, Shana and Yuji encounter several more Flame Haze, such as Margery Daw and Wilhelmina Carmel, and Denizens in Misaki City. An organization of Denizens called Bal Masqué discovers that Yuji possesses the Reiji Maigo and attempt to use the Treasure Tool on two separate occasions. Bal Masqué is led by three Lords called the Trinity: Hecate, Sydonay, and Bel Peol. They serve under a Crimson God known as the Snake of the Festival, who resides within Reiji Maigo. When the Snake of the Festival emerges, it merges its consciousness with Yuji's, assuming command over Bal Masqué, and together they formulate an elaborate plan to create a parallel world called Xanadu, which will serve as a paradise for Denizens with unlimited Power of Existence. Shana, and all of the other Flame Haze around the world, oppose the creation of Xanadu, which would eventually cause a large-scale disruption in the human world, the Crimson Realm and Xanadu itself.
Shana formulates a countermeasure and is ultimately successful in adding a single law to Xanadu where the Denizens are not allowed to eat humans anymore. With Xanadu created, the Denizens depart to the new world, soon followed by hundreds of Flame Haze determined to help enforce order on it. Yuji intends to go to Xanadu alone and make sure humans and Denizens can eventually learn to coexist, but Shana refuses to be left behind. In the end, Yuji accepts Shana's feelings and the two kiss, which activates a spell left to Yuji by Crimson Lord Lamia that restores his existence, so Yuji is no longer a Torch. With the help of another spell from Lamia, Yuji successfully restores all humans in Misaki City whose existence was absorbed by the Denizens before he and Shana depart for Xanadu together.
