It is a Japanese Buddhist custom to honor the spirits of one's ancestors. This custom has evolved into a family reunion holiday during which people return to ancestral family places and visit and clean their ancestors' graves when the spirits of ancestors are supposed to revisit the household altars. In Japan, It has been celebrated for more than 500 years and traditionally includes a dance, known as Bon Odori. Each year during Obon, It is believed that the ancestors' spirits return to this world in order to visit their relatives. Lanterns are hung traditionally in front of houses to guide the ancestors' spirits, Obon dances (bon odori) are performed, graves are visited and food offerings are made at house altars and temples. Floating lanterns are put into rivers, lakes, and seas in order to guide the spirits back into their world, at the end of Obon. From region to region the customs followed vary strongly.

From the 13th to the 15th day of the 7th month of the year, Obon is observed, which is July according to the solar calendar. The 7th month of the year since roughly coincides with August rather than July according to the formerly used lunar calendar, Obon is still mainly observed in mid-August, although in some areas it is also observed in mid-July. In Japan, the Obon festival is an annual Japanese holiday which commemorates and remembers deceased ancestors. At this time it is believed that their spirits return to visit their relatives. People take the chochin lanterns to the graves of their families, on the first day of Obon. In a ritual, they call their ancestors' spirits back home called mukae-bon. Huge fires are lit at the entrances of houses to guide the spirits to enter, in some regions. Families help their ancestors' spirits return to the grave by guiding them with their chochin lanterns, at the end of the Obon festival.

Floating lanterns (toro nagashi) have gained popularity, in recent years. To symbolically send their ancestors' spirits into the sky the beautiful lanterns float down a river that runs to the sea. From region to region the style of the traditional Bon Odori dance varies but it is normally based around the rhythms of Japanese taiko drums. On a yagura, stage Dancers perform and participants wear light cotton kimonos. The dances can be joined by anyone who is held in parks, temples, and other public places around Japan. To the ancestors, Families pay tribute and visit the graves of deceased relatives, while in some areas there are long-established traditional dances known as bon odori. In mid-august, many companies give employees days off for Obon. The festival while particularly associated with Buddhism, in which tradition is also known as Urabon'e, is observed in Shintō, too.

From a story, the custom derives about a disciple of the Buddha who made offerings to save his mother from torment in the realm of hungry ghosts (one of the traditional six realms of existence in Buddhism). Obon has become one of Japan's most important customs, Since the Edo period (1603–1868), ranking alongside the New Year celebrations in the calendar of annual events. To ensure they can find their way to the family residence on the thirteenth, Families light the way for ancestors, the first day of the festival known as Mukaebon. This was done through open fires originally, but now it is common to use lanterns with electric bulbs. The holiday has become a time for family reunions, more recently, as people return to their hometowns and revisit the graves of the deceased. Murky is the exact origin of Obon. Behind this ritual the story is believed to have originated in India, then spread to China and other parts of South Asia, eventually making its way to Japan. A disciple of Buddha in it uses supernatural powers to contact the spirit of his deceased mother. His mother had descended to the 'Realm of Hungry Ghosts', upon realizing this the disciple became distressed and asked the Buddha how to free his mother's spirit from her pain.

To prepare offerings for the Buddhist monks Buddha instructed him who were returning from a summer retreat. His mother's spirit was freed, upon doing so. Between August 8 and August 16 in 2020, the peak of the Obon travel season is anticipated to take place. The sixteenth of the month, on Okuribon, more fires light the spirits back to the netherworld. Bon Odori is the greatest spectacle of the three-day event, it is a traditional folk dance performed during Obon to welcome the spirits of the dead. In 2008 and 2019, one exception was, when the solar and lunar calendar matched so Hachigatsu Bon and Kyū Bon were celebrated on the same day. In areas such as the northern part of the Kantō region, Chūgoku region, Shikoku, and Okinawa Prefecture, Kyū Bon is celebrated. Participants traditionally wear yukata, a kind of light cotton kimono, as Obon occurs in the heat of the summer. A huge carnival with rides, games, and summer festival foods is included in many Obon celebrations.