GHOULISM is set in an alternate reality where ghouls, cannibalistic 'monsters' who look exactly like normal people but can only survive by eating human flesh, live among the human population in secret, hiding their true nature in order to evade pursuit from the authorities. Including enhanced speed, senses, and regenerative ability, a regular ghoul is several times stronger than a normal human, has a skin resistant to ordinary piercing weapons and has at least one special predatory organ called a kagune (Japanese: 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").

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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.

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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 speed and reaction speed, but shortened lifespans.

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To hunt down the ghouls, several government-sponsored organizations such as the CCG were created worldwide.