The series follows 2 Angel sisters, Panty and Stocking, who are kicked out of heaven for bad behavior. They are sent to Daten city, which lays somewhere between Earth and Heaven, and are tasked by God to hunt ghosts, demonic like beings that terrorize the citizens of Daten city. Killing a ghost will drop "Heaven Coins" which they can use to buy re-entry into Heaven with once they have enough. Both Panty and Stocking have angelic powers that can turn panties and stockings respectively into Guns and Swords, which can make short work of ghosts but don't affect Humans at all.
Panty and Stocking live with Gaterbelt, a priest who passes them the locations of ghost attacks and frequently screams at them for getting sidetracked with Panty and Stockings interests in having sex with Men and sweets respectively, as well as their Rude and aggressive attitudes to everyone and everything around them. Also with them is a strange Mutant dog named Chuck, who can only say his name and is frequently physically abused by all 3 the characters and often "Dies" although he can reassemble himself each time and seems otherwise completely unaffected. Panty and Stocking also become "friends" with an awkward geeky boy named Brief, who has a massive crush on Panty. Both Panty and Stocking verbally and physically abuse him near constantly, treat him like dirt in general and have both shown to not really care if he dies or not. Although they both come to somewhat like him later on in the series.
Panty and Stocking eventually meet Scanty and Kneesocks, 2 Demon sisters whose powers closely mirror that of Panty and Stocking where they would become rivals throughout the series, being the only Demons who could fight Panty and Stocking near to a standstill. They are the daughters of the mayor, Corset, who is searching for "Hell's Monkey" so he can use him to unlock the gates of Hell and conquer earth so he can overthrow God and become the new ruler of the universe.
As time goes by, Panty becomes less and less involved with killing the ghosts and focuses more on her personal goal of having sex with 1,000 Men, leaving Stocking to do most of the work. When they eventually earn enough coins to enter Heaven, only Stocking is let in while Panty is locked out, due to her slacking off. Even after this, Panty continues to ignore her duties and sleep with men even after being told she wasn't allowed to anymore. This leads to god stripping away Panty's powers (meaning she loses access to her Angelic Guns) and locking her out of heaven permanently. This leaves her vulnerable to Scanty and kneesocks who attack her shortly after, but she escapes with the help of Brief. Shortly after they are found by Corset who abducts Brief because his Penis is actually the key to opening Hell,
Panty is thrown out of Gaterbelt's church because she is no longer useful to him without her powers. After running away for a few days due to the devastation of everything, Panty goes to the keyhole that's keeping Hell locked away to confront Corset and rescue Brief. Panty attempts to break the Key to hell by having sex with Brief (Because the Key will only work while Brief is a Virgin) but fails when Brief falls into the Keyhole and begins the process anyway. Corset, Scanty and Kneesocks go to attack Panty but then Stocking drops down from Heaven to fight them off, with Panty helping after regaining her powers by Having sex with Brief. After a lengthy battle with Help from Heaven forces, the 2 defeat Corset and seemingly kill and stop the process of Hell Opening.
As they return home, Stocking suddenly stabs and kills Panty and hacks her into 666 Pieces, and reveals she is actually a Demon, shocking Brief and Gaterbelt. Corset also reappears as small blob and tells them that there is another gate of Hell that Brief must open, and he will bring Panty back to life if he does so. Corset and Stocking then leave, leaving a trail of Panty's remains for them to follow. As the season ends, Gaterbelt tells Brief that he and Chuck must journey to the other gate of hell to bring Stocking back to life.