Truck driver Jack Burton (Kurt Russell) and his friend Wang Chi (Dennis Dun) go to the San Francisco International Airport to pick up Wang's fiancee Miao Yin (Suzee Pai). While at the airport, a Chinese street gang (called the Lords of Death) kidnap Miao Yin and take her into Chinatown intent on selling her as a sex slave.Jack and Wang follow and in the back alleys of Chinatown they get caught in a gang battle when the Wing Kong interrupt a funeral procession the Chang Sing are having for their recently assassinated leader. During the street battle, powerful magicians in league with the Wing Kong, called "The Three Storms" (Thunder, Rain, and Lightning) use their supernatural powers to slaughter the Chang Sing. Trying to escape Jack runs over the Wing Kong's leader, the sorcerer Lo Pan (James Hong). However, Lo Pan is not harmed by this and Wang has to help Jack after he is temporarily blinded by Lo Pan's glowing eyes.Jack's truck is then stolen by the Lords of Death. Wang takes Jack to his restaurant 'The Dragon of the Black Pool', where they meet up with lawyer Gracie Law (Kim Cattrall), Wang's friend Eddie Lee (Donald Li) and Egg Shen (Victor Wong), a magician and local authority on Lo Pan who moonlights as a tour bus driver in Chinatown. They come up with a plan to infiltrate the brothel where they think Miao Yin is being held. Once inside Jack (in disguise), starts to question one of the girls, but is interrupted when the Storms crash in and make off with Miao Yin.Back in Gracie's apartment, they find that Miao Yin was taken to a place called The Wing Kong Exchange, a front for Lo Pan's domain. With Wang's assistance, Jack infiltrates the place and the two get caught in a lift that fills with water. After making their way out, Wang claims they're in "The hell of the upside-down sinners," and they are taken to a cell by Rain, who grabs Wang by the neck, and sends rubber balls to Jack's stomach with force.Afterwards, they are taken in wheelchairs to see Lo Pan (now in the form of a crippled old man), where he claims that Miao Yin is "Safer with me than any creature on this Earth", after telling them of his intent. Lo Pan catches Gracie, Eddie, and Gracie's journalist friend Margo entering the building on his security monitor, and sends Thunder to deal with them. Wang and Jack are taken back to their cell, still in the wheelchairs, when Wang tells Jack about the 2,000 year old legend of Lo Pan; that he was cursed to roam the Earth in a ghost-like form until he can marry a special kind of girl. They break free from the wheelchairs, but hearing Thunder return, they get back into the wheelchairs and put their blindfolds back on. Thunder hangs Eddie up by the collar of his jacket, and Jack jumps Thunder, who manages to push Jack off of him and into his wheelchair, sending him back down the ramp, and nearly into a deep well. Wang and Eddie make a diversion so Jack can rescue the imprisoned girls and get out safely.Upon reaching the front entrance, Gracie is caught by a monster, and taken to Lo Pan. Both Gracie and Miao Yin tame "The Burning Blade" and Lo Pan decides to marry both and sacrifice Gracie, and live out his 'Earthly Pleasures' with Miao Yin. Wang and Jack go to see Egg Shen, and, with the help of the Chang Sings, go into an underground cavern, and eventually into Lo Pan's offices.Egg gives the group a potion that Jack says makes him feel 'kind of invincible', and when the group get to the ceremony, a huge fight ensues (which Jack inadvertently manages to miss, due to being knocked out with rubble when he fires his gun above his head), with Wang killing Rain in an elegant sword fight. Jack and Gracie head back to the offices to try and catch Lo Pan, the spell having been broken. Wang joins them, and takes on Thunder, while Jack takes on Lo Pan, throwing his knife at him, which embeds into his skull. Thunder sees this and, enraged and dishonored at his failure to protect his Master, starts to inflate to an enormous size without stopping, exploding and killing himself. Jack, Wang, Gracie and Miao Yin are cornered by Lightning in a corridor, which he makes collapse. Egg manages to rescue them by sending down a rope from a hole above them, which Lightning tries climb in order to follow, with Egg throwing down a statue which crushes him.They find Jack's truck and make their escape back to The Dragon of the Black Pearl restaurant. With Lo Pan defeated, Egg decides to go on vacation saying China is in the heart, and Jack hits the open road, with an unknown-to-him stowaway.... one of the remaining monsters.