Set in the year 2029 and following World Wars III and IV, a Japanese-led Asian block dominates world affairs. The alliance maintains its international supremacy through its elite security force whose cybernetically enhanced operatives tackle an array of hi-tech terrorists and other threats to international security. These augmented agents can "ghost hack" (i.e., download their consciousness) via the now omnipresent internet into other machines and human/machine cross breeds.

Major Motoko Kusanagi, a cybernetically augmented female agent, has been tracking a virtual entity known as the Puppet Master with her crack squad of security agents. The shape-shifting Puppet Master, a rogue creation of a rival agency of the security apparatus, has concluded that it is a life form in its own right, "born in sea of information," and requested political asylum and true physical existence in defiance of its creators.