Oninaki is an action role-playing game where players take on the role of the Watcher Kagachi, who battles monsters called the Fallen while exploring the game world through two planes; the Living World and the Beyond. Players view environments from an isometric angle, with Kagachi exploring dungeon environments completing both story-based and optional quests. Standard enemies roam the dungeon environments, attacking Kagachi on sight, while many areas end with a boss encounter.
During exploration and combat, Kagachi can find Healing Salves which restore health, upgrade artifacts, and grant new weapons. In the Beyond, the environment shifts, allowing for new routes to open or allowing access to teleport points for travelling between different areas. During combat in the Beyond, Kagachi gives and takes more damage. There are some zones that must be cleared and revealed in the real world, as otherwise Kagachi must navigate a black void and is killed in one hit by enemies. By defeating Fallen, Kagachi earns experience points which raise his basic statistics.
Kagachi battles the Fallen using Daemons, spirits manifesting as weapons. Starting off with a basic sword Daemon, Kagachi gains more Daemons as the story progresses. Each Daemon comes with a different weapon type, such as scythes, axes and spears. Daemons have different weapon-based skills, mapped to four different control buttons, each with a cooldown timer after use. Using a Daemon increases an affinity meter; reaching 100% raises Kagachi's attack power, while going above 150% begins decreasing his defence. When at 100% and above, Kagachi can trigger an empowered state. Using a Daemon in combat earns Soul Stones which unlock that Daemon's skill tree; unlocks include new combat abilities which are equipped to three of the four buttons, stat increases, and small cutscenes related to the Daemon's narrative. Using skills repeatedly unlocks bonuses for that attack. New weapons found during exploration and combat can be equipped to Daemons, with these weapons having slots for upgrade gems, which increase weapons stats.
Kagachi is a Watcher, a person charged with defending the Cycle of Reincarnation, killing monsters formed from regret with spirit weapons called Daemons and helping spirits pass into their next life by any means necessary. He works closely with his adopted father Kushi and his daughter Mayura, operation from the world's one city Szaka. In the aftermath of a mission against a cult rebelling against the Cycle of Reincarnation, Kagachi meets a spirit girl he called Linne. Linne is being hunted by the Night Devil, a powerful spirit who hounds Kagachi and gives aid to the cult in undermining the current monarch Lobelia. Lobelia and her son Leo instruct the Watchers to focus on destroying the cult over their other duties, causing friction within the Watchers. During one mission against the cult, Mayura is killed and Kagachi helps free her spirit. The Night Devil confronts Kagachi several times, possessing Watchers with his hatred and eventually using Kushi as his host.
Kushi incites a rebellion, with the people demanding spiritual equality with the elite surrounding Lobelia. Kagachi tries to reason with the mob, but they attack and force him to kill them. As Kagachi confronts Lobelia, Kushi appears and reveals that Lobelia usurped the throne after having the last true sovereign executed. Kushi attacks, but Leo protects Lobelia at the cost of his life. Kagachi then defeats Kushi, learning as he dies that the Night Devil is a Daemon filled with hatred that wants to end the world. Lobelia further reveals that the true sovereign was key to preserving the world, and a terrible force has been preparing itself since she ended the bloodline. Kagachi finds the Night Devil, learning along the way that he is a fragment of his previous incarnation Soju, banished brother of the true sovereign. After defeating the Night Devil and absorbing him, Kagachi kills himself. Linne, transforming into an adult form, prays for Kagachi to make a new future as a monster emerges from underground to destroy the world.
Awakening as Soju in the past, Kagachi pieces together his history; raised by an assassin's guild, Soju acted as a precursor to the Watchers as he carried out the last wishes of lingering spirits. After one such mission, he was killed. Meeting Sara, he realises that "Linne" was her spirit. Sara explains that the sovereign must keep the Oni, a manifestation of the despair humans discard during reincarnation, from awakening; the monster seen awakening in Kagachi's last life was the Oni. They go to the First Pillar, an ancient magical landmark, and view murals of humans defeating the Oni and Sara's ancestress establishing Szaka, with the Oni sleeping under it. Journeying into the palace and entering the pool of despair at its heart, Kagachi experiences the hopes of those who fought the Oni in ancient times as he escapes; during this time he sees Szaka, called here the Wailing Land where the Oni sleeps.
The Oni is revealed to have created the Cycle of Reincarnation to nourish itself with despair, heralded and nurtured by a human avatar called the Oni Priestess; with each awakening and defeat, the Oni destroyed a little more of the world, until only a portion of it remains. Its next awakening will destroy the world, also leading to the Oni's demise without humans to feed it. Kagachi confronts Sara, the current Oni Priestess, and she asks him to decide the world's fate. Kagachi can choose to accept the Oni's awakening and the world's end, or fight Sara. Defeating Sara, he then destroys the awakened Oni. Kagachi then chooses to either kill himself or watch over the world from the Beyond.