After an opening-credits montage of the major players demonstrating their abilities, the story begins and shows different divisions of the anti-foreigner Yi Ho society, a branch of the Boxer movement, practicing different techniques of their "pugilism." Everyone is skilled in kung-fu, but some also use trick weapons and mind control. Ti Hau is a pupil of Master Ti, a high-ranking member. Ti Tan, is a Shaolin monk who has successfully trained his students to resist penetration from swords, but sacrifices them by experimenting with techniques to resist bullets. This appalls his niece, Fang Shao Ching. Lei Ying can control subjects with a voodoo doll and ventriloquism. The society chief, Li, explains that Lei Kung, an old pugilist master who left to form another branch in Yunan, has dissolved that branch and gone into hiding. Lei Kung no longer believes that their martial arts skills can defeat the modern weapons used by the western colonialists. Chief Yi proclaims Lei Kung a traitor to their movement. The chief orders his execution, and claims he can be identified because he enjoys showing off his kung-fu skills.
In Guangdong/Yunan, Ti Hau makes inquiries into the whereabouts of Lei Kung at a popular inn. Also searching is Fang Shao Ching, disguised as a man, and Lei Ying. They are unaware of each other's identities, but observe each other suspiciously. A flamboyant man also shows up and arouses suspicion. Ti Hau and Fang Shao Ching both suspect Lei Ying of being Lei Kung, and sneak into the attic above his room at the inn. They fight in the cramped space as Ti Tan walks into the room below, but he does not see them before they escape.
An old woodcutter, Yu, also arouses Ti Hau's suspicion because of his great strength. Fang Shao Ching distracts Ti Hau and lures him away, and they fight again but must stop in order to hide from Ti Tan. Fang explains to Ti Hau that her and Ti Tan are also Yi Ho members sent to kill Lei Kung, but she maintains her male disguise.
The flamboyant man is a con artist, and is hired by Lei Ying to impersonate Lei Kung. With the help of a team of con men, he publicly demonstrates amazing kung-fu and magical abilities and declares himself to be Lei Kung. Ti Hau follows him and attacks, but Lei Ying takes control of the con artist with a voodoo doll, leading to another fight. Ti Hau realizes it is a fraud, but has alerted Lei Ying to his identity. At the end of the fight, Ti Hau falls into a sewage pond and begins to get sick.
In town, a shopkeeper mistakes Lei Ying for woodcutter Yu, and says they look alike. Fang Shao Ching goes to Yu's house and discovers a hidden set of kung-fu weapons, and finds Yu in town and confronts him. But she reveals that she is on his side, agreeing that the society's pursuit of magical immunity to gunfire is hopeless. However, Yu denies he is Lei Kung.
Ti Hau comes to Yu's house at night to kill him, but is so sick that he collapses. Fang arrives and confronts Yu again, who admits to being Lei Kung. The next day, Lei Ying arrives and fights him, but stops and reveals that they are brothers. He does not want to kill him, is disappointed that Lei Kung's skills have diminished, and suggests he get back in shape.
Under Fang's guidance, Lei Kung practices with his weapons. Ti Hau, who has been bedridden, sees him, but Lei Kung maintains his identity as the woodcutter Yu by saying that he only looks like Lei Kung, and must defend himself. They both discover that Fang is a woman. When Ti Hau regains his strength, he is grateful to Yu for taking care of him and is about to leave, but Ti Tan arrives. Fang and Ti Hau fight him before Yu, now at full power, engages him. He finally admits to everyone that he is Lei Kung, and declares that he has betrayed the Yi Ho society because he does not want to see all his young students die in a futile attempt to fight foreign modern guns and cannon. He disables Ti Tan, who admits defeat and leaves. Ti Hau feels betrayed and also leaves.
That night, Ti Hau's master arrives to kill Lei Kung. Ti Hau also shows up to kill him, but changes his mind. Ti Hau's master admits defeat, suggests Ti Hau stay with Lei Kung, but says he'll return. However, Lei Kung is more worried about Lei Ying. He reveals that his brotherly concern was a charade, and that brothers in his clan are mortal enemies.
The next day, Lei Kung dresses in ceremonial garb and arrives at a temple with Ti Hau, Fang Shao Ching, and a full set of weapons. Lei Ying is waiting, and reveals his plan. He wanted Lei Kung to regain his expertise and kill the other assassins. Then Lei Ying could avoid fighting others and concentrate on Lei Kung, killing him and elevating his position in their clan and Yi Ho society. After an 8-minute duel showcasing most of the 18 weapons and hand-to-hand combat, Lei Kung demonstrates that he could win if he wanted to. But instead, he leaves Lei Ying to his disgrace.