Caution: Wikipedia contains spoilers
The story takes place a thousand years after the "Seven Days of Fire" destroyed human civilization and most of the Earth's ecosystem. Scattered settlements survive, isolated from one another by the "Sea of Corruption" (fukai), a lethally-toxic fungus jungle swarming with giant insects, except when they squabble over the finding of an ancient technological artifact.
The title character, Nausicaš (Naushika in Japan) is a young princess of the peaceful Valley of the Wind. Her name comes from the princess in the Odyssey who assisted Odysseus, part of her character from a Japanese legend of "the princess who loved insects". Although a skillful fighter, she is normally humane, charismatic, and peaceloving. She has the unusual gifts of empathy toward animals, humans, and other beings, and of "windriding", a sort of natural piloting talent which permits her to fly a mehve ("seagull"), an advanced mini-hang glider with a jet assist.
The Valley of the Wind becomes threatened when the more powerful states, Pejite, Torumekia, and the Dorok Empire, unearth a "God Warrior" (kyoshinhei), one of the lethal giant bioweapons used in the ancient war, and which they hope to use against other countries and the Sea of Corruption.
The situation deteriorates as the fight to possess the God Warrior escalates out of control, and as the inimical fukai strikes back against those who attack it. But this is not a simple story. Even the "monsters" may be working toward some secret harmony, even the lethal mutant fungi may have some vital role, and today's allies may be tomorrow's enemies -- or vice-versa.
As she is increasingly forced to aid prisoners, villagers, and then her sometime enemies, mutant insects, and artificial bioweapons, Princess Nausicaš becomes increasingly a Joan of Arc figure, a warrior maiden inspired by a supermundane vision to defend all life against destruction.
Note: a very badly cut and dubbed version of the film was distributed and shown on HBO in the 80's as "Warriors of the Wind" and is strongly not recommended by fans of the original, nor Miyazaki himself.