After breaking into the governor's palace and taking a bunch of gold, he becomes public enemy number one. The angry governor orders his chef constable to search for the Iron Monkey and arrest anyone associated with him. Yang treats many of the men injured while pursuing the Iron Monkey at night, as the constable remains unaware that the physician is really the fabled "hero." Wong's father is arrested and falsely accused of being the Iron Monkey.
Wong ends up fighting the Iron Monkey to prove his innocence. The governor witnesses this and kidnaps the young Wong to convince his father to catch the Iron Monkey, which he must do within seven days. The locals turn on the senior Wong for helping the unpopular governor in his quest to capture the "thief." Wong ends up at Yang's clinic after falling ill while in prison. Eventually, Wong learns the identify of the physician. The two band together to take on the governor.
There are plenty of action scenes as the two, with Wong sometimes wearing the Iron Monkey costume now, break into the governor's house again and take more gold to distribute to the poor people in the town. The governor orders a search of the entire town to track down the Iron Monkey. It turns out somebody who has been "helping" in the hunt for the Iron Monkey has actually known his identity all along and has been secretly helping him avoid capture.
Iron Monkey is a classic tale of corruption and greed going up against the power of good as represented by the Iron Monkey. The movie concludes with a final confrontation - with a few twists and turns - and hope that things will be better. And the Iron Monkey becomes an iconic figure of good in Chinese culture.