Set in Canada, Obasan centers on the memories and experiences of Naomi Nakane, a 36 year old schoolteacher living in the rural Canadian town of Cecil, Alberta, when the novel begins. The death of Naomi's uncle, with whom she had lived as a child, leads Naomi to visit and care for her widowed aunt Aya, whom she refers to as Obasan (Obasan being the Japanese word for "Aunt" in this context). Her brief stay with Obasan in turn becomes an occasion for Naomi to revisit and reconstruct in memory her painful experiences as a child during and after World War II, with the aid of a box of correspondence and journals sent to her by her Aunt Emily, detailing the years of the measures taken by the Canadian government against the Japanese citizens of Canada and their aftereffects. With the aid of Aunt Emily's letters, Naomi learns that her mother, who had been in Japan before the bombing of Pearl Harbor, was severely injured by the atomic bomb dropped on Nagasaki; a finding which changes her perspective of the 'War in the Pacific', and rekindles the heartbreak she experienced as a child.
Naomi's narration thus interweaves two stories, one of the past and another of the present, mixing experience and recollection, history and memory throughout. Naomi's struggle to come to terms with both past and present confusion and suffering form the core of the novel's plot.
Although Obasan is fiction, the events, Parliamentary legal documents, and overall notion of racism mirror reality. Through the eyes of fictional characters, Kogawa tells the story of Japanese-Canadians during the Second World War.