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.

Rakka's new companions take her into the town of Glie. She learns that most of the people here are not Haibane, that Haibane can only own things humans have stopped using, and that they are required to work. The wall around the city and countryside keeps everyone in; only the Toga can come and go freely, and only the Communicator can speak to them.

The Haibane go into town to buy Bell Nuts, gifts of reconciliation for the Passing of the Year festival. Reki gives one to Hyouko, and he and Midori finally tell Rakka what happened. Rakka learns about the Renmei's sign language, and the Communicator gives her her true name. After the festival, the Haibane of Abandoned Factory send Reki a message.