The protagonists find a race of microscopic illegals growing on their faces. Yasako, utilizing a communication device devised by Megabaa, becomes heavily engaged in a god game-like relationship with the developing civilization. She attempts to use her divine influence to save the war-mongering race before it crumbles from a nuclear holocaust. In the wake of devastation, the illegals set out to find their "homeland".
Yasako realizes the nature of Michiko, 4423, and the Coil Domain. Aided by her friends and family she must fight Michiko's grip on Isako and to avoid Nekome's desire to dispose of her consciousness.
Using the glasses that belonged to her deceased grandfather, Yasako travels to the other side to save Isako. Meanwhile, Megabaa finds out that they were mistaken on who 4423 really is.
Haraken catches a brief glimpse of Kanna before the collapse of Isako's gateway. Fearing for her nephew's life, Tamako confiscates his glasses. Meanwhile, obsolete space begins to invade Megabaa's shop as Kyōko, Fumie and Yasako spend the night.
Yasako and Isako, on the run from Megamass and a powerful new searchmaton, take refuge in Megabaa's store. There, it is discovered that Densuke has the potential to open a stable portal to "the other side", now known as "Coil Domain". It is revealed that Coil Domain, Michiko, Imago and Kirabugs are remnants of an experiment gone awry, covered up by the Megamass conglomerate.
After Kyōko is taken to the "other side", Yasako and Fumie evade the illegals and guide Kyōko's dennō body back to her real body with the help of Densuke.
Yasako and Fumie ask Yasako's grandmother, Megabaa, to cure Densuke of a deadly illness. In return Yasako agrees to join Megabaa's Detective Agency as their eighth member. Meanwhile Isako relentlessly searches for the "Keyhole". Deducing that it resides as an illegal in Densuke, she unleashes her virtual pets to capture him.
A frenzied dennō battle breaks out at school between Isako, Fumie, and Daichi's group, the Daikoku Hackers' Club. While Isako is the ultimate victor with Daichi's group completely subdued, Fumie manages to steal a piece of data from Amasawa that reads, "Michiko".
With Kanna's glasses, Haraken sneaks out once again to the "other side" where he finally makes amends with a digital apparition of her. Yasako ventures in to the rescue with Isako and Tamako's help. It is revealed that Tamako was the first person to open the gate to the "other side", and the meaning of the show's title, Dennō Coil, is the phenomenon of the separation of one's dennō body from their physical body.
Nekome, driven to reveal true nature and history of the "dennō" technology, tries to convince Isako to join her brother in Coil Domain using Densuke as a portal.
Alarmed at what happened to Isako, the children's parents take away their glasses.
Daichi, in a plot to acquire metabugs, catches and raises a fish-type illegal as a virtual pet. He eventually loses control of it as it floods Daikoku City with digital water.
Isako leads the beaten and desperate Daikoku Hackers' Club on a metabug expedition over the fringes of Daikoku's cyberspace. During the expedition, Isako traps and assumes control of the Daikoku Hackers. Captivated by Isako's skill, Daichi asks to become her disciple.
The protagonists agree to aid Denpa in relocating a docile plesiosaur-type illegal, which he had previously been raising in an obsolete space now scheduled for reconstruction. The lonesome illegal, driven to find more of its kind, follows the children in a hazardous journey through the city.
Yasako, attempting to find the place where she first met 4423, meets a boy named Takeru who guides her through the neighborhood. Deducing that the place from her memories was a virtual space deleted by Searchmaton, Yasako heads home as Takeru reports the day's events to a mysterious collaborator.
As First and Third elementary merge for classes on the top floor of a Megamass office building, Isako finds herself involved in a conspiracy by Megamass to research obsolete space and the effects of Dennō Coil.
Having captured Densuke, the Mojos deliver him to Isako. After separating the illegal from Densuke, Isako unsuccessfully attempts to "unlock" the organism with her key, causing nearby cyberspace to rupture. She reports the episode to a mysterious conspirator over the phone.
Haraken, tortured by the possibility that Kanna Ashihara still exists in "the other side", asks Isako to take him there.
For their research project, Haraken and Fumie find early records of dennō users who have passed out and reported hallucinations of "the other side". Meanwhile, Yasako spies on Isako as she visits her comatose brother. Deducing that he is 4423, Yasako confronts Isako with her realization that she has met her brother years ago.
The kids spend a dark and stormy night at school telling ghost stories and playing spooky dennō games. Isako uses the distraction to capture a kirabug manifested in the form of Michiko inside the school. Meanwhile, Haraken is briefly whisked away to "the other side".
Yasako and Kyōko arrive by train to Daikoku City. Their virtual pet dog, Densuke, goes missing when he falls into an abandoned zone of cyberspace occupied by an illegal. Yasako enlists the aid of Fumie, a detective from the Coil Dennō Detective Agency, to help rescue her pet. In their efforts, they attract the attention of Searchmaton.
Isako once again summons the kirabug illegal with the help of the Daikoku Hackers. However her plans are inadvertently disrupted by the pet detectives Yasako and Fumie working on an unrelated case. Isako eventually chases the rogue virus to a corrupted space on the school grounds.
Haraken, Fumie, and Yasako follow clues left by Haraken's former research partner, Kanna Ashihara. Meanwhile, Daichi is ejected from Isako's group due to his failure to defeat Fumie in a duel.
Yasako and Fumie begin an investigation into Haraken and Searchmaton. They attempt to test and map out Searchmaton's behavioral patterns and programming. Under pressure, Haraken reveals to Yasako and Fumie his familial connections to the administrators of Searchmaton and his motive for investigating viruses and illegals.
Isako hatches a plan and asks Daichi to challenge the Coil detectives to a duel. Daichi, at the expense of his revived friendship with Fumie, reluctantly complies. Haraken recovers a mysterious metabug from his former research partner's lost pet.
Fumie's younger brother, Akira, recaps the story of the TV series from his perspective as a double-agent. Haraken is accosted by Nekome and is warned about investigating further.