The film is set in the Ming dynasty, during the Wanli Emperor. Gu Jinfu, a eunuch from the spy agency Eastern Depot, leads a team to retrieve the ''Chrysanthemum Manual'', a martial arts manual which was stolen from the Forbidden City. They track down and attack Lin Zhennan. Lin Zhennan encounters Linghu Chong and Yue Lingshan, two students from the Mount Hua Sect, and asks them to inform his son, Lin Pingzhi, where the manual is hidden.
Linghu Chong, Yue Lingshan and members of the Mount Hua Sect are planning to retire from the ''jianghu'' (martial artists' community). They learn that Dongfang Bubai has seized control of the Sun Moon Holy Cult and is secretly plotting with some Japanese ''rōnin'' to rebel against the Ming dynasty and dominate China. Dongfang Bubai had castrated himself in order to master the skills in the ''Sunflower Manual'', and his appearance has become more feminine, even though he is now a formidable martial artist.
