The seventh lunar month in the Chinese calendar is the ghost month. DouDou goes to stay with Grandma on the lunar 1st of July, the day the host gate is opened. Grandma performs Taoist ceremonies for the deceased and communicates with ghosts. One day, DouDou accidentally lets the devil out of an urn. The devil possesses a sleepy house cat and tells DouDou that he can see invisible friends by applying Grandma's tears into his eye-lid. Little does DouDou know that this is part of the devil's plot to eat all of the ghosts.

"Grandma And Her Ghosts" resembles the style and the touch of the great Hayao Miyazaki ("My Neighbour Totoro") with the strong root of the Taiwanese culture.