The Sandman: The Dream Hunters is a novella by Neil Gaiman, illustrated by Yoshitaka Amano. The story is tangential to The Sandman comic book series, and can be read without prior knowledge of the main sequence. It won the Bram Stoker Award for Best Illustrated Narrative.
The story deals with a love affair between a Buddhist monk and a fox spirit or kitsune. Gaiman's afterword states that it was based on an old Japanese folk tale, drawn from Y. T. Ozaki's Old Japanese Fairy Tales and retooled to fit in the world of the Sandman, but no such tale is to be found in Ozaki's work. Gaiman has since stated when asked that the story was entirely of his own devising, most recently in the Foreword to The Sandman: Endless Nights. In December 2007, Gaiman noted on his blog, "I learned from Wikipedia that Sandman: The Dream Hunters was actually based on Pu Songling's Strange Stories from a Chinese Studio, which I thought I ought to read."
A fox spirit and a badger (which might refer to the more folkloric tanuki) make a bet that whichever of them drives a Buddhist monk from his temple can claim it as their own. Both of them fail, and the badger flees in disgrace. The fox, however, has fallen in love with the monk. She apologises to him in the form of a beautiful woman, and he allows her to stay in the temple provided she does not cause him any more trouble.
Meanwhile, in a house in Kyoto, a rich onmyōji is consumed by a nameless fear, and consults three women living at the edge of town. They give him instructions to alleviate this fear; the result is that the aforementioned monk will become trapped inside a dream, and his body will sleep continuously until it dies.
The fox overhears this from several demons employed by the onmyōji. In an attempt to avert this, she consults the King of All Night's Dreaming (who takes the form of an enormous black fox). He listens to her plight, and in the ensuing conversation, the fox formulates a plan to capture a baku, and use it to take the monk's place in the dream.
The plan is successful, but the monk is distraught at the fox's condition, and leaves his temple to find the means to awaken her. He encounters Binzuru Harada who instructs him on how to find the King of All Night's Dreaming. After a journey through the realm of dreams (during which he encounters the Japanese counterparts of Fiddler's Green and Cain and Abel from the Sandman comics), he arrives at the palace. The gatekeeper, an Itsumade, eventually lets him in. A raven, who is the departed spirit of a poet, guides him through it, and he is granted an audience.
The King of All Night's Dreaming tells him what the fox had done, and that if he rescues her, her efforts will have been in vain. The monk insists and is allowed to meet the fox (who is now trapped inside a mirror). He frees her against her wishes, and the King of All Night's Dreaming allows them time for farewells. The monk then takes the fox's place, giving her the advice, "Seek not revenge, but the Buddha." The fox informs Morpheus of this advice, then tells him she will seek the Buddha after seeking revenge. She awakens and stays with monk until he dies the next day.
The fox tracks down the onmyōji and seduces him in her human form, giving no indication of her true nature. She insists that he cannot have her while he has his possessions and power. Maddened with lust, he burns down his house, and that of the three women, killing his wife, concubines, and servants in the process. He then returns to the fox. She cajoles him into disrobing, then reverts to her true form and bites one of his eyes, leaving him with his madness.
In the realm of dreams, the King of All Night's Dreaming and the raven ponder the events and their significance; The King of All Night's Dreaming is satisfied that events played out as they should have, and that everyone involved learned an important lesson, particularly the monk. The narration ends implying that monk and the fox might have ended up together, but remains inconclusive.