In early 20th century Shanghai, Chen Zhen returns to Jingwu School to marry his fiancée. However, tragic news awaits him: his master Huo Yuanjia has died, apparently from illness. Chen is deeply saddened and traumatised by the sudden demise of his teacher. During the funeral, people from a Japanese dojo in Hongkou District arrive to taunt the Jingwu students. Wu En, the Japanese dojo's grandmaster Hiroshi Suzuki's translator and adviser, taunts Chen by slapping him on the cheek several times, and dares him to fight him. Then the Japanese students, along with Wu, leave. Shortly thereafter, Chen goes to the Hongkou dojo alone to engage in a fight. Chen defeats all of them, including the students' master.
Later, Chen takes a stroll to a park. A Sikh guard refuses him entry, due to a posted sign that forbids dogs and Chinese in the park. After the guard allows a foreigner to bring her pet dog into the park, a Japanese man approaches Chen and tells him that if he behaves like a dog, he will be allowed to go in. Chen beats up the man and his friends in anger. After the fight, Chen breaks the sign. The guard blows his whistle to alert the police, meanwhile the citizens that watched the whole fight help Chen to get out of the park entrance quickly.
Meanwhile, the Japanese students and their master retaliate by attacking Jingwu School on the orders of Suzuki. After causing severe damage, the Japanese students leave. Wu, following the Japanese students, warns Jingwu School to hand over Chen. Chen returns and realises that he has caused big trouble. His fellow students are reluctant to hand him over to the Japanese, so they make plans to help him escape from Shanghai.
That night, Chen discovers that Master Huo had all along been poisoned by Tien, the cook. Chen then sees Tien and Feng Guishi, the caretaker, talking. Chen kills Tien. Feng cowers behind a wall, unsuccessfully sneak attacks Chen, and is killed by Chen. Chen hangs Tien and Feng's bodies from a lamp post. Chen's fiancée, Yuan Li'er, finds him hiding near Huo's grave. They share a passionate moment together briefly. At the same time, Suzuki forces the local police inspector, Inspector Lo, to arrest Chen but he eludes them. Then, while Suzuki welcomes his visiting friend Petrov, Chen kills Wu.
The angry Suzuki sends his men to Jingwu School to kill everyone inside. That same night, Chen barges into the dojo to take his revenge, killing the students' master, Petrov and Suzuki. Chen returns to Jingwu School and finds everyone from Jingwu School and the Hongkou dojo dead. However, a few Jingwu students remain. Yuan, Fan Junxia (the eldest student at Jingwu), and Fan Jiaqi are the only survivors. Inspector Lo arrives at Jingwu to arrest Chen, who agrees to surrender himself to Lo to protect his master's legacy. Lo tells Chen that he can always trust him since he is Chinese. As he exits the school, Chen faces a line of armed soldiers and suited officials at the outer gate, all pointing their weapons at him as a firing squad. Furious, Chen charges the line and makes a flying kick as gunshots sound.
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