The plot centers on a masked martial artist known as Iron Monkey. Iron Monkey is actually the alter ego of a traditional Chinese medicine physician called Yang Tianchun. During the day, Yang runs his clinic and provides free medical treatment for the poor, which he subsidises by charging his rich patients. At night, he dresses in black and travels around town to rob the rich and help the poor.
Once, he breaks into the governor’s residence and makes off with a hoard of gold. The guards and four Shaolin monks are unable to stop him. The governor orders the chief constable, Fox, to hunt down Iron Monkey and to arrest anyone who is linked to him in any way. Fox appears to be a bungler who is not aware that Iron Monkey is actually the physician treating his injured men who fought with Iron Monkey the previous night.
In the meantime, Wong Kei-ying, also a physician and martial artist from Foshan, arrives in town with his young son, Wong Fei-hung. Wong Kei-ying fights with street thugs who attempt to rob him. Some soldiers who have been observing the fight nearby suspect that Wong is Iron Monkey, and they arrest him and his son. During the trial, the governor orders Wong Fei-hung to be branded for defiance, but Iron Monkey shows up and disrupts the proceedings.
Wong Kei-ying is eager to prove his innocence, and he fights with Iron Monkey. Neither of them is able to defeat his opponent, and Iron Monkey escapes. The governor is impressed by Wong Kei-ying’s skill, and he holds Wong Fei-hung hostage to force Wong Kei-ying to help him capture Iron Monkey within seven days.