Set in Japan, 1000 years after the modern era, year 66 in the Kamisu ("The Nest of the Gods") Era, Shin Sekai Yori follows the life of Saki, a girl from the town of Kamisu 66. In this age, all humans possess powerful psychic abilities, and live an idyllic life in agrarian villages. Despite her parents' fears that she may not awaken her powers, Saki gains her special powers at the age of twelve and joins her friends Satoru, Maria, Mamoru, Shun, and Reiko in enrolling at school to hone her gifts. However, the children are unaware that the village government is monitoring and evaluating them through the education system. Based on these evaluations, certain students are removed from society, whether it is for poor performance, such as with Reiko, or for cheating. These removed students are also forgotten by the other children; Saki and her remaining friends have no memory of Reiko. Later, during an unsupervised camping field trip, Saki and her friends encounter the False Minoshiro, a mythical animal revealed to be an ancient library robot. The False Minoshiro explains much of the violent truth of their people's history and what their special powers truly are.

In AD 2013, 0.1 percent of the population developed psychic abilities that allowed them to alter their surrounding environment. Soon after the powers manifest, many begin using them for violence and crime. This leads to a breakdown of modern society and a world war that devastates the human population. The conscious and unconscious use of these powers alter the wildlife and the environment. After the fall of modern society, oppressive, feudalistic regimes rise up over humanity. These regimes, too, dissolve in chaos due to the violence of the psychic humans. Eventually, the psychic endowed humans established a stable society where they control their powers by using genetic modification and social conditioning to make themselves incapable of violence against other humans. The act of murder activates a biological Death Feedback, causing the murderer's organs to shut down and killing the attacker almost instantly. The villages also use genetically designed animals for various purposes. The mole-like Monster Rats resemble humanity, able to speak human language and living in a complex eusocial society ruled by queens. The feline Impure Cats are used to kill children at risk of developing one of the two dangerous disorders: The Karmic Demons (業魔 Gōma?) who are unable to control their powers and the Ogres (悪鬼 Akki?) who can suppress the attack inhibition and death feedback and use their special powers against humans.

In the middle of interrogating the False Minoshiro, Saki and her friends are found by the monk Rijin. He destroys the False Minoshiro and seemingly seals away the children's special powers for associating with a demon. On the way back to be judged at the village, Rijin is killed by a rogue Monster Rat tribe while Saki and Satoru separated from their friends. They are captured by the rogue monster rat colony. Using objects found during their trip, Saki and Satoru are able to escape their prison. During their escape, they meet a Monster Rat, Squealer, of the Robber Fly colony who rescues them from their pursuers. Saki and Satoru help Squealer and his colony to defeat the rogue monster rats, later with assistance from General Kiroumaru and his Giant Hornet colony, a colony with an especially close to relationship to humans. After regrouping with their friends with the help of Squealer and general Kiroumaru, Saki restores their powers, using the same hypnotic methods the village uses to control children, before returning to the village under the belief that the adults do not know of their transgressions.