Tokyo Ghoul is set in an alternate reality where ghouls, creatures that look like normal people but can only survive by eating human flesh, live among the human population in secrecy, hiding their true nature in order to evade pursuit from the authorities. Ghouls have powers including enhanced strength, speed, endurance and regenerative abilities—a regular ghoul produces 4–7 times more kinetic energy in their muscles than a normal human; they also have several times the RC cells, a cell that flows like blood and can become solid instantly. A ghoul's skin is resistant to ordinary piercing weapons, and it has at least one special predatory organ called a Kagune (赫子), which it can manifest and use as a weapon during combat. Another distinctive trait of ghouls is that when they are excited or hungry, the color of their sclera in both eyes turns black and their irises red. This mutation is known as kakugan (赫眼, "red eye").

A half-ghoul can either be born naturally as a ghoul and a human's offspring, or artificially created by transplanting some ghoul organs into a human. In both cases, a half-ghoul is usually much stronger than a pure-blood ghoul. In the case of a half-ghoul, only one of the eyes undergoes the "red eye" transformation. Natural born half-ghouls are very rare, and creating half-ghouls artificially initially has a low success rate. There is also the case of half-humans, hybrids of ghouls and humans that can feed like normal humans and lack a Kagune while possessing enhanced abilities, like increased reaction speeds, but shortened lifespans. Naturally born half-ghouls can also eat like normal humans or full ghouls.