The story begins with the protagonist, a terminally ill man reincarnated as a Dungeon Master, meeting the Dungeon Core, a flat-chested demon girl he nicknames "Peta-chan." Peta-chan explains that Dungeon Cores, driven by a primal desire to grow, struggle to understand human desires, leading them to summon human Masters. The Master, having enjoyed management games in his previous life, proposes an unconventional "Onsen Dungeon" (hot spring dungeon) focused on beauty effects, a concept Peta-chan finds utterly baffling but accepts.
The Master's unique ability to manage the dungeon through a game-like status window, a stark contrast to the traditional scrolls and books used by other cores, allows for incredibly rapid and efficient construction. Peta-chan is initially bewildered, then amazed by his "modern knowledge cheat." The first floor, featuring a beauty-enhancing hot spring, is quickly completed. Initial male adventurers investigate cautiously, but it's two female knights who, after confirming the water's safety, bathe and experience dramatic skin and body improvements. Their report to the Sepans Kingdom's Queen leads to a massive influx of 100 female knights, overwhelming the first floor's bath. The resulting scramble for space and subsequent brawls generate an unprecedented amount of Dungeon Points, which the Master uses to rapidly expand the bath and construct new floors.
Within two months, the Onsen Dungeon expands to eight floors, each offering enhanced or unique beauty effects (e.g., hair luster, blemish removal, anti-aging, and eventually scar-healing on the 8th floor). The dungeon's fame spreads through noble society, turning beauty-enhancing baths into a social necessity. Noblewomen, including the disfigured ducal daughter Auff, begin visiting, requiring expensive knight escorts. Auff, initially despairing over her disfigurement, finds hope and significant healing from the 1st-floor bath. Her analytical mind recognizes the dungeon's "cunning" and "evil merchant"-like manipulation of human desire, noting how it compels even the highest-ranking individuals to brave its dangers for beauty, creating both immense profit and societal "distortion." She resolves to train herself to reach deeper floors.
The Master, observing the escalating human desire and the inevitable deaths in deeper floors, finds his human empathy waning, replaced by a detached "unpleasantness." Peta-chan explains that monsters are a natural byproduct of the dungeon's miasma and the "miracles" (hot springs) it creates, and that conflict provides vast Dungeon Points. She also reveals that the Master's unique UI and even boss monsters are manifestations of their desires. When the Master hesitates to expand to the 9th floor, Peta-chan, driven by her core's primal desire for growth, pouts and temporarily shuts down her consciousness. Feeling a rare moment of loneliness, the Master confirms his own lingering "humanity" before deciding to temporarily shut down his consciousness as well. The Onsen Dungeon has transformed from a quirky idea into a powerful, society-altering force, rapidly growing and manipulating human desires on an unprecedented scale.