Danny Phantom centers on the life and adventures of 14-year-old Danny Fenton, an unpopular but good-natured boy attending Casper High School (reference to Casper the Friendly Ghost) in his small American hometown of Amity Park. He lives with his eccentric ghost hunting parents, Maddie and Jack, and an overbearing 16-year-old sister, Jazz (short for Jasmine). Upon pressure from his best friends, Sam and Tucker, he decides to explore his parent's Ghost Portal. They had created it with the intent of finally bridging the real world and the Ghost Zone (the ghostly parallel universe of Earth), but upon plugging it in, it failed to work. Once inside, he accidentally presses the "On" button, (something that his naïve parents failed to do), subsequently activates the portal, and due to him being inside it at that moment, it infuses his DNA with ectoplasm, transforming him into a half ghost boy, nicknamed "The Halfa" by the rest of the ghost community.

A simple, but fitting saying for Danny's transformation is "going ghost". Danny and his friends use this saying the most. Danny, who calls himself 'Danny Phantom' in ghost form, develops the ability to fly, become invisible, and turn his body intangible at first and throughout the timespan of the series learns other powers such as his ghost ray, ghostly wail and cryokinesis. Danny panics over his newfound powers and initially has little control over them, but he soon realizes that he can use his powers to protect his town from ill-meaning ghosts. After the defeat of a Lunch Lady Ghost in the first episode, Danny turns to the life of a superhero, using his powers to rid his hometown from the various ghosts that plague it. Danny's best friends, technophile meat-loving Tucker Foley and goth-minded ultra-recyclo vegetarian Samantha (Sam) Manson support Danny and help him with his ghost fighting.

Danny's ghost self is a polarization of who he was when he entered the ghost portal. When he goes ghost, his black hair turns white, his blue eyes turn green and the white jumpsuit he was wearing during the accident is now black. Fortunately, in an episode, Sam removes the Jack Fenton logo on Danny's jumpsuit before the accident. If she had not, it would be part of Danny's ghost form every time he goes ghost. In the second season Sam accidentally wishes for her and Danny to never have met, and by the work of a malevolent ghost called Desiree, it comes true, and Danny loses his ghost powers as a result. In the end she convinces the 100% human Danny to reenact the accident in order to regain his powers, but before that happens, she puts her newly designed logo on the jumpsuit, giving him the new Danny Phantom logo when he goes ghost. The logo is a white "D" with a "P" inside it on Danny's chest. The intro also added the logo for seasons 2 and 3.

Aside from a variety of ghosts, Danny faces threats of many calibers, including vengeful ghost hunter Valerie Gray, who for a certain period of time becomes his love interest, other half ghost/rival Vlad Masters/Plasmius, an old friend of his father's and considered to be his true arch-rival, and even his own parents—being ghost hunters, they view Danny Phantom (and any ghosts) as a menace to society. In addition, Danny tries to keep his secret safe from his classmates, teachers, and family. Throughout it all, Danny slowly realizes his own potential and his purpose, while his worlds - both the Ghost Zone and Earth - slowly begin to accept him as their defender.