Otogi 2 is set in Japan and steeped in real-life folklore and mysticism. Raikoh, the famed undead warrior, managed to temporarily save the Japanese population from an onslaught of demons, but had not been able to vanquish them all before returning to his grave. The demons have now regrouped from hiding places within the sacred capital of Japan, and they are ready to attempt to take dominion over man once more. In response, five brave warriors ritualistically take their own lives to resurrect Raikoh. By fulfilling the ritual, Raikoh rises again and the five warriors rise with him, all set to take on the encroaching demon spawn as a team.