It's the mid 19th century in China's Zhejing province and Governor Cheng (JAMES WONG), the corrupt ruler of the land, has hoarded food from the masses. In response, a masked vigilante known as the Iron Monkey has become a folk hero by robbing the government and distributing food and money to the poor.
This infuriates Cheng who orders his constable, Chief Fox (YUEN SHUN-YEE), to apprehend or at least unmask the intruder who's highly proficient with martial arts. Fox, his forces and even some mercenary Shaolin monks try, but are unsuccessful at doing just that.
Among those amused by Cheng and Fox's attempts are Dr. Yang (YU RUANG-GUANG) and his assistant, Miss Orchid (JEAN WANG), who run the local clinic and treat the poor for free. They become concerned, however, when Cheng - upon hearing of the imminent arrival of the Royal Minister - orders that anyone who might be the Iron Monkey be arrested.
Among them are Wong Kei-Ying (DONNIE YEN) and his young son, Wong Fei-Hong (TSANG SZE-MAN) who are on their way home. The Iron Monkey exonerates everyone by showing up while they're all incarcerated, but Cheng is so impressed by Kei-Ying's martial arts skills that he holds Fei-Hong hostage until his father can capture or kill the Iron Monkey.
Yet, Kei-Ying soon realizes he's working on the wrong side of the law as no one save for Dr. Yang and Miss Orchid will help him as everyone views the Iron Monkey as their hero. From that point on, Kei-Ying and others assist the Iron Monkey in his battle against the corrupt government that includes the arrival of the all powerful and very dangerous Royal Minister (YEN YEE KWAN).