The great hero Li Mubai (played by Chow Yun-fat) intends to retire from the underworld, and entrusts his confidante Yu Xiulian (played by Michelle Yeoh) to hand over the Qingming Sword to Beile Ye (played by Lang Xiong) for collection. Unexpectedly, it was stolen by Yu Jiaolong (played by Zhang Ziyi) that night. Yu Xiulian secretly investigated and roughly knew that it was the work of Yu Jiaolong, the daughter of Yufu. She tried to force Yu Jiaolong to return the sword to avoid hurting the harmony. But Li Mubai discovered the trace of the Blue-Eyed Fox (played by Cheng Peipei) who killed his master. She hid in Yufu and accepted Yu Jiaolong as her disciple. Yu Jiaolong wanted to use the Qingming Sword to cut off the shackles that hindered Luo Xiaohu (played by Chang Chen), and they secretly decided to spend their lives together. The relationship became complicated. Yu Xiulian and Li Mubai cherished Yu Jiaolong's rare talent and tried their best to guide her, but Yu Jiaolong was willful and refused to listen to the advice...