Elfen Lied takes place in Kamakura, Japan, focusing on a new strain of the human race - Diclonius, similar to ordinary human beings, yet different at the genetic level and notable due to physical abnormalities, particularly a pair of short horn-like protrusions. One such Diclonius, Lucy, is the main character of the series: initially held in a facility built for experimentation, located off the coast of Kamakura, Kanagawa Prefecture, she manages to escape and wreak havoc, but is injured in the process, an event which causes her to develop a secondary, child-like personality known as Nyu.

She is found by two local residents, Kohta, who studies at the local university, and his cousin Yuka. They agree to take her in, becoming involved with the numerous, often brutal, attempts to recapture Lucy by a Special Assault Team and a number of other Diclonius, who shift from oblivious to murderous frequently. Other characters include Bando, a SAT trooper who was mauled by Lucy and infected with a virus, and Kurama, a carrier of the virus.

While the animated series ends with Lucy confronting a large team of SAT members, after which she disappears, the manga continues by showing the mad plans of Kakuzawa, leader of the Diclonius' research, and his ultimate failure. The world itself is endangered.