In the very near future, a revolutionary new psychotherapy treatment called PT has been invented. A device called the "DC Mini" allows the user to view people's dreams, exploring their unconscious thoughts. The head of the team working on this treatment, Doctor Atsuko Chiba, begins using the machine illegally to help psychiatric patients outside the research facility, using her alter-ego "Paprika", a persona she assumes in the dream world.

The plot begins on the revelation that DC-Minis have been stolen, and are being used by an antagonist to bring people into a state in which dreams and reality are indistinguishable, driving them to madness or death. Doctor Chiba takes on her role as Paprika to seek out those responsible for the theft, by venturing into dreams searching for clues. Assisting her is her research assistant and creator of the DC Mini, as well as a police chief whom she assists in a psychotherapy session.