Kazuo Sugiyama is a doctor in the local hospital of a small suburban town in the Nagano Prefecture of Japan. Ever since Kazuo's wife Toshiko died, he has felt ungrounded and aimless. Left alone with his four year old son, Kazuo has been unable to drag himself out of depression and give his son the type of fathering he deserves.
When Kazuo runs into his wife's old friend Etsuko on the tennis court, things begin to change. Etsuko is a contemporary, educated, and well-traveled woman who still finds the time to appreciate the more spiritual side of life. Etsuko tries to provide support for Kazuo and effortlessly helps him take care of his son and elderly father, Matsukichi.
Just when things are beginning to cheer up, Matsukichi gets ill and is admitted to Kazuo's hospital. In the hospital, Matsukichi meets Mike Chandler, an American priest who is dying of cancer. Incredibly calm for a man facing death, Chandler breathes life back into Matsukichi. Chandler remembers the days when people noticed the world around them and took time to experience the magic of nature. Matsukichi is grateful to find that hope still exists, even in the heart of a dying American. Matsukichi was a railroad engineer for most of his life; he always drove the slower trains to feel the wind in his face and see the trees in the forests.
Kazuo pays little attention to Matsukichi and Chandler's chit-chat until suddenly Chandler passes away. Upon hearing of his friend's death, Matsukichi sets out to build a watermill. Everyone is surprised by Matsukichi's sudden strength, but the old man is determined. Etsuko and Kazuo's son help Matsukichi, but Kazuo still keeps his distance, finding the whole idea of building a watermill somewhat ridiculous. Gradually some of his family's joy rubs off on him, and Kazuo remembers his wife's lust for life. Etsuko reminds Kazuo of his wife, and finally she convinces him to begin living his life again. Matsukichi finishes the mill, and the water flows through it.
One cold morning the water freezes in the mill. Matsukichi goes outside to fix the mill and dies peacefully amongst the diamond dust—the fine morning ice that glitters like diamonds. Even in death life sparkles.
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