Like the anime, the live-action version of Grave of the Fireflies focuses on two siblings, Seita and Setsuko, struggling to survive the final days of the war in Kobe, Japan.

Unlike the animated version, however, it tells the story from the point of view of their cousin (their aunt's daughter) and also deals with the issue of how the war-time environment could change a kind lady into a hard-hearted woman.

It opens at a crematorium in Kobe, Japan, where a family is paying their respects to Hisako Sawano (Seita and Setsuko's aunt), who has just passed away at the age of 95.

The funeral director comments how a person who lived through the Meiji, Taishō, Shōwa, and Heisei periods has finally gone to rest.

After the funeral, Natsu (Seita's and Setsuko's cousin), Hisako's eldest of four children who is now a grandmother herself, sorts through her mother's belongings with her teenage granddaughter, Keiko.

Natsu begins to tell her about the family's struggle to survive during the Second World War, and the emotional scars that it left.

Just prior to Seita's death in September 1945, someone informed Hisako and Natsu that he was still alive, though with no sign of his sister Setsuko and living near the central railway station in Kobe.

This triggers another janitor's memory and he recalls that the previous night, the two of them had found a dead boy matching Seita's description in a corner of the station.

While carrying his corpse to be cremated, a metal fruit-drop tin fell from his clothes and thinking it rubbish, the janitor tossed it into a field.

Hisako locates the tin; while Natsu looks on, she opens it and tips two small bits of white bone into her palm – Setsuko's.

Hisako falls silent, while Natsu, who understands what happened to her cousins, blames her mother for causing their deaths and walks away, crying.

Seita's father, a Captain in the Imperial Navy, privately reveals to him that the war is going badly for Japan, telling him that he must now look after his mother and sister as he will soon be deployed, and that he is willing to die in the Emperor's service.

As time progresses, an ever-increasing number of people are forced to deal with bombing raids and worsening shortages of food.

Afterwards, Hisako speaks to Seita about leaving on his own during the bombing and how he should start to help by letting her sell his mother's jade ring for rice.

Seita is hesitant at first but gives in despite his sister's vehement refusal, leaving Setusko furious at her brother for selling their mother's ring.

During another bombing, Seita breaks into a shop and steals food but is caught, beaten up by the store owner, and taken to the police.

Hana, Yuki, and Teizō are relieved the war is over while Natsu is shocked that they lost and Hisako simply goes to cook breakfast.

Hisako slaps her, warning Natsu that the real war has begun and dying means losing before embracing her daughter as she cries.

Natsu narrates that her family moved back to Tokyo and a law was passed in Japan to protect orphans affected by war.

After the closing scene while the movie's credits roll, images of children affected by military violence and occupation are shown.

Commenting on the dramatization, Akiyuki Nosaka noted that the drama was liberal in deviating from his original work but also said that he would nevertheless remain thankful if it could convey the brutality of wars to the people of the present days.