The primary protagonist of Angelic Layer is Misaki Suzuhara, a seventh grader who just moved to Tokyo to live with her aunt, Shouko Asami. After arriving in the city, she watches the battle doll Athena on a big screen television outside of Tokyo Station and becomes interested in learning about Angelic Layer, a highly popular game in which players (called Deus) buy and custom-design dolls known as Angels. Angels can move by mental control when on a field called the "layer." Layers are very expensive; most users rent them by the hour in establishments resembling cybercafes.
An eccentric man wearing a white lab coat and glasses, calling himself "Icchan" (いっちゃん), encourages Misaki to purchase and create her own angel. She names the angel Hikaru, after Hikaru Shidō from Clamp's Magic Knight Rayearth (a manga in Angelic Layer's world), which she was reading on the train to Tokyo. She wants the angel to be "a short girl, but strong and happy" like Hikaru and herself. In the anime, Misaki names her Hikaru after her favorite doll from her childhood. Even though she's clueless about the game, Misaki soon competes in tournaments and is assisted and watched carefully by Icchan. Later, Icchan's identity is revealed as Ichiro Mihara, the co-creator of Angelic Layer.
Misaki also begins studying at the Eriol Academy, an educational institution which includes grades from kindergarten through high school. There she becomes friends with Hatoko Kobayashi, a very intelligent and mature kindergarten girl who is a famous Deus and an Angelic Layer expert. Her incredibly fast angel Suzuka is a favourite contender in tournaments. Misaki also befriends Hatoko's older brother Kōtarō and his friend Tamayo Kizaki, a girl fascinated by martial arts. Both turn out to be Misaki's classmates.
While adjusting to her new surroundings, Misaki is also gripped by her past. Her thoughts often dwell on her mother, whom she has not seen since pre-school. Eventually Misaki learns that her mother was key in the development of Angelic Layer, which she worked on in an attempt to develop a perfect prosthesis for her multiple sclerosis, which has confined her to a wheelchair. Her mother is also the Deus of Athena and the champion of Angelic Layer.
In the manga series, Misaki's mother does not have multiple sclerosis, nor is she depicted in a wheelchair. The ending to the manga also has different couplings.
The manga series is set a few years before Chobits, a Clamp work in the same universe as Angelic Layer. In the manga, Icchan plays an important role in the Chobits storyline, but this connection was reduced to a single scene in the anime; the Chobits anime was also made by a different company. Likewise, in the Chobits anime, Icchan has a brief cameo but is not mentioned by name for the same reason. Kaede's younger brother Minoru is also a Chobits character.