Angel Beats! is set in the environment of a high school in the afterlife, a type of limbo where people have experienced trauma or hardships in life and must overcome them before passing on and being reincarnated. The story follows Yuzuru Otonashi, a boy with amnesia who ends up in the afterlife. He meets Yuri Nakamura, a girl who invites him to join the Afterlife Battlefront (死んだ世界戦線, Shinda Sekai Sensen), or SSS, an organization she founded and leads which rebels against an unseen God for their unfair circumstances in life. Their enemy is Angel, the student council president, who has supernatural powers and is believed to be God's associate. After joining the SSS, Otonashi meets others members, including Hideki Hinata, the co-founder; Masami Iwasawa, the lead vocalist of a four-girl rock band, Girls Dead Monster (GDM); and Yui, an underclassman and fan of GDM. Other than the SSS members, the afterlife is populated by fabricated students and teachers, whom Yuri refers to as "non-player characters" (NPCs).
Otonashi participates in several SSS operations and missions, despite still questioning the morality of their actions. During one of GDM's diversion concerts, Iwasawa passes on from the afterlife after achieving satisfaction through her music. After the SSS manages to demote Angel from her position, Otonashi partially regains his memories with the aid of deputy president Ayato Naoi's hypnosis. He later befriends Angel, whose real name is Kanade Tachibana, and remembers the rest of his past while in her presence. Otonashi helps her make peace with the SSS and learns of the afterlife's true purpose. He subsequently offers to aid Kanade in helping other SSS members to pass on, and Kanade is reinstated as student council president in accordance with their plan. They are joined by Hinata and Naoi, with the former helping Yui move on by fulfilling her desire of marriage.
Mysterious shadow-like entities begin appearing, attacking the residents of the afterlife by turning them into NPCs. Otonashi reasons with the other SSS members and many of them agree to pass on in lieu of becoming an NPC. Yuri destroys the source of the shadows, which were created by computers programmed to activate when love was detected in the afterlife to prevent it from becoming a paradise. Her affections for the members of the SSS allow her to finally overcome her regret, and by this time, the only other ones who have not passed on are Otonashi, Yuri, Kanade, Hinata and Naoi. The five remaining students hold a graduation ceremony before Naoi, Yuri and Hinata pass on leaving only Otonashi and Kanade.
Otonashi confesses to Kanade that he has fallen in love with her and wants them to remain in the afterlife to help others move on. However, Kanade reveals that her regret was being unable to thank her heart's donor, Otonashi, for extending her life. Otonashi is heartbroken after she thanks him and passes on, leaving him alone in the afterlife. Later, two people resembling Otonashi and Kanade encounter each other on the street in the real world. In an alternate epilogue, Otonashi becomes the high school's student council president and helps lost souls depart from the afterlife while waiting to see Kanade again.