In the fictional city of Mitakihara, Japan, a middle school student named Madoka Kaname and her friend Sayaka Miki encounter a small, cat-like creature named Kyubey. It offers a contract in which a girl may have any wish granted in exchange for obtaining magical powers and being tasked with fighting against witches. Meanwhile, a transfer student and magical girl named Homura Akemi tries to stop Madoka from making the contract with Kyubey at all costs. Madoka and Sayaka then meet Mami Tomoe, an upperclassman at the same school who is also a magical girl and offers to bring them along on her witch hunts so that they may learn of the responsibilities that come with being a magical girl.

As Madoka contemplates accepting the contract with Kyubey, she witnesses the death of Mami at the hands of a witch and realizes that a magical girl's life is filled with danger, anguish, and suffering. Madoka also discovers that not only do magical girls give up their souls to form their Soul Gems, the source of their magic, but when those Soul Gems become too tainted with despair, they transform into the very witches they fight against. This is exemplified when Sayaka, heavily disillusioned with the current state of the world, falls into an irrecoverable despair that turns her into a witch. It is then revealed that Kyubey's alien race is harvesting the emotions from magical girls to use as energy to counteract the spread of entropy. Madoka also learns that Homura is a magical girl from a different timeline who has repeated the same month countless times in order to try to save her from a grisly fate. After these revelations, Madoka decides to become a magical girl with the wish to stop witches before they are created. This rewrites the laws of the universe, resulting in Madoka becoming nothing more than a concept and Homura being the only one who remembers her in the new world that is formed.