明嘉靖年间，倭寇大举向东南沿海入侵。杭州被陷，萧总兵之侄萧峰是一剑术高手，闻讯前来救其叔，却来迟一步。萧峰路经李镇，遇到桥本忍的先头部队到达，欺压百姓，幸萧峰出手相助，令倭寇仓惶逃命。萧峰劝村民组织起来对倭寇，并为其组织四处奔波，寻找奇才能士。群雄得到一重要情报，倭寇粮草部队将在七天内到达，遂在战神滩上布置。是夜，倭寇到来，被战神滩上陷阱所伤，但仍凭借人数优势得以冲进李镇。

A one-armed martial arts master is being stalked by an Imperial assassin, the master of two fighters killed in the previous film. When the One-Armed Boxer is invited to attend a martial arts tournament, his efforts to lay low are unsuccessful, and the assassin soon tracks him down with the help of his three subordinates: a Thai boxer, a yoga master, and a kobojutsu user.

Lei Ming, a noble young martial arts student who doesn't know the meaning of giving up. He faces a treacherous, blood-thirsty Japanese karate expert, which leads to many memorable battles as well as several unforgettable training sequences.

A martial-arts student learns the iron fist and death grip techniques to avenge his teacher's death.