After the swordsman Li Mu Bai decides to give his legendary "Green Sword" to the High Council, there is only trouble: the sword has hardly arrived when it is stolen again by a mysterious masked girl. Eventually it turns out that the thief's name is Jen Yu and she is the governor's daughter. Impressed by her fighting skills, Mu Bai decides to train Yu as his student and make her a fighter for law and order. But the girl shows little interest and uses her skills for senseless acts of violence. Along with his secret flame Lien, Mu Bai eventually finds out that Yu is the disciple of the evil Jade Fuchs, who once killed Mu Bai's master. Mu Bai and Lien believe in the good in Yu and want to free her from Jade Fuchs. The decisive duel ensues...