This article looks at two of the films of Japanese anime auteur Satoshi Kon – Millennium Actress (2001) and Paprika (2006) through the lens of magical realism. The authors argue that animation can be read as magical realist (which is applied to literature) as opposed to magic realist (which is applied to art), as animation is flowing art and hence has a narrative structure as in literature. While incorporating Wendy Faris’s five characteristics of magical realism in the analysis, the article also introduces additional concepts that are unique to Millennium Actress and Paprika. The authors engage with magical realist apparatuses in these anime, arguing that the two films use unconventional narratives and modes to reveal an Asian (Japanese) identity, uniqueness in form and sense of self. Kon’s films, although rooted in realism, explore the magical that embodies desire and longing in Millennium Actress and an exploration of the unconscious in Paprika.