1300 years ago, Goddess Mago (SEO YI-SOOK) and Reaper (KANG HONG-SUK) watch a family of three dying in a forest. The parents are already dead, but their young daughter fights to stay alive. Reaper wants to help the little girl pass on but Mago asks him to give her some time, especially when she’s fighting so hard.
A little while later, a father and son pass through the forest and spot the family. They think everyone is dead, but the boy, who is of a similar age as the dying girl, realizes that she is alive and feeds her. He asks her name, which she says is Man-wol, by drawing the moon symbol over his hand. He calls her pretty and she smiles. It’s the boy who first tells Man-wol about the Inn of The Moon, where souls go to rest.
Standing on the hotel’s balcony, Man-wol (IU) wonders, “How is it that I am 1300 years old and only met you now?” Chan-sung (YEO JIN-GOO) replies that some connections take a lifetime to form. Man-wol remembers Mago telling her that the hotel will stop getting new guests soon, and would only run until the next full moon. Under the stars, Man-wol and Chan-sung share an embrace.
Seo-hee (BAE HAE-SUN) can’t seem to find Sun-bi anywhere. After his conversation with the dead author’s ghost, Sun-bi (SHIN JUNG-GEUN) has been trying to leave secretly, before the book about ‘lewd scholar’ Kim Shi-ik, aka him, is published. Remembering the promise he made to Hyun-joong (P.O) and Seo-hee, however, he is unable to leave without saying goodbye. Seo-hee informs Man-wol of Sun-bi’s absence and the details of the author’s story. Man-wol talks to the author’s ghost and discovers that his manuscript is with his publishers.
Sun-bi visits the publishing house and watches the editor read the manuscript. When the editor takes a bathroom break, Sun-bi makes himself visible to the guy, hoping to scare him out of publishing the book. But the editor considers the ghost sighting as a good omen and pushes for publication. Man-wol and Chan-sung help Sun-bi out by buying the manuscript.
Man-wol asks Sun-bi to stay in Chan-sung’s room for a while. When Chan-sung learns the titles of the stories Sun-bi wrote, he’s shocked—because over time, the stories have become popular folklore. Sun-bi tells them how, while studying for the state exam, he had begun writing stories about ordinary people as a way to not feel lonely. He had eventually obtained first place in the exam, but his stories had been found and deemed obscene. His first rank had been revoked, and his father had passed away from shame. Unable to stay or go home, Sun-bi had died alone.
Man-wol doesn’t believe Sun-bi’s claim of his stories being “innocent.” Chan-sung remembers that he forgot to tell Sanchez (JO HYUN-CHUL) that a ghost would be staying in his room, but it’s too late—Sanchez walks in on Reaper and Sun-bi having a chat. Man-wol and Chan-sung convince the dead author’s ghost to put a positive spin on Kim Shi-ik’s story. Another ghost author agrees to help.
Sun-bi returns to the hotel and teams up with the two writers for the book about his life, which goes on to become a major hit. Over a celebratory cocktail, Sun-bi thanks his colleagues and Man-wol for clearing his name and announces that he will be leaving soon. He is clad in a white suit for the occasion. After saying tearful goodbyes to everyone, he gets in the car and leaves. Man-wol finds a thank-you letter and cocktail from him on her desk and breaks down upon reading it.
Hyun-joong runs into Yu-na (MINA) visiting his sister Hyun-mi at the hospital. They agree to break up, with him going to the afterlife soon and her deciding to go study abroad.
Seo-hee visits the pregnant woman who is carrying the last child of the family she wants dead. The woman tells Seo-hee that irrespective of whether the child is a boy or girl, the child will have her surname instead of carrying forward the Yun family’s line. Seo-hee breaks down, regretful that she couldn’t be this strong for her daughter, and wishes the woman’s child a healthy life.
On one of their restaurant dates, Man-wol tells Chan-sung that she began liking Kim Joon-hyuk because he looked like a man she met many years ago, who told her to eat good food and won a baduk match for her. Chan-sung tries to explain that it was him, when he visited her 200 years back, but she refuses to believe him. Once again, Man-wol gives him the medicine to forget everything and asks him to take it when the time is right.
Hyun-joong’s sister passes away, and when he goes to meet her, she is her little self again. Yu-na sees what has happened and runs away crying. She finds Mago’s card in Chan-sung’s room and decides to visit her. Hyun-joong gets ready to leave and says his goodbyes to everyone, but seems to wait for Yu-na. When she finally arrives, it’s with a bouquet of Mago’s special flowers. She tells him not to worry and promises that she will live well. As Hyun-joong leaves, both him and Yu-na are sobbing.
Young-su (LEE TAE-SUN) and Mi-ra (PARK YOO-NA) decide to get married. They’re out shopping when Man-wol pays Mi-ra a surprise visit to congratulate her and hypnotizes her to warn her to treat Young-su well. She goes back to Chan-sung, who is waiting for her in a park, and announces that Seo-hee is leaving soon. Seo-hee gives one last, thorough check to every room of the hotel. Man-wol thanks her for comforting her all these years.
Chan-sung visits Mago to ask why he was chosen to lead Man-wol to the afterlife. She tells him that he has yet to see one last dream from the past. Man-wol wanders through the empty hotel, missing her staff and thinking of her time there. When Chan-sung arrives, she says she’s sleepy and he lifts her up to take her to the bedroom. They sink into sleep, and that’s when Chan-sung dreams about rescuing a dying Man-wol as a young boy.
Mago’s fancy sister visits the hotel to get back the scissor she lent to the ghost bride who needed it to sever the red thread of fate. Chan-sung asks her to help him go back in time so he can see winter with Man-wol. He takes Man-wol’s hand and takes her to the other side of the moon spirit tree, where it’s snowing. They realize that they had known each other a long time ago, and wish for one more chance to see the snow together.
Finally, it’s time for Man-wol to leave. She can’t bear to leave Chan-sung behind but consoles him by promising to meet again in their next life. In tears, they say their final goodbyes. Chan-sung sobs uncontrollably as he watches her retreating figure.
Slowly, everything associated with Hotel del Luna vanishes from the world, including the moon spirit tree. Night turns to morning, and Chan-sung stands right where he saw Man-wol off. He says one last tearful goodbye to her. We get our last look at our haughty but gentle hotel-owner Man-wol as she crosses the bridge to the afterlife with a smile.
That winter, Chan-sung decides to go back to New York. He meets Yu-na before leaving, who informs him that she’s going to study hotel management. She took the medicine to stop seeing ghosts and is able to study well. When she asks if Chan-sung took the medicine too, he doesn’t answer. He also goes to see the Mount Baekdu painting and sees Goddess Ma Go there, which answers Yu-na’s question.
Chan-sung imagines sitting on a park bench in a sunlit park, surrounded by Seo-hee, Sun-bi, Hyun-joong—reborn and having a good life. Man-wol sits beside Chan-sung and leans her head on his shoulder, and they promise to be together if they cross paths in another lifetime.
Goddess Mago gathers up all her avatars to inform them of a new hotel. While she tries to remember the name of the new hotel, a man (a perfect ending cameo by none other than KIM SOO-HYUN) walks by a hotel sign called ‘Blue Moon’ and instructs his staff to open for business.