Paul Racine (Christopher Lambert), a computer-chip executive from New York, is on one of his many business trips to Nagoya. He meets a beautiful woman named Kirina (Joan Chen) in the hotel lounge, and ends up having a one-night-stand with her. When he attempts to further the relationship, Kirina implies that she has no future and thanks him for a wonderful night of pleasure and love. Dejected and somewhat confused, Paul reluctantly leaves her to be alone as she requests.Soon after the gaijin leaves her suite, however, she is approached by Kinjo (John Lone) and two other men dressed as ninja. Kirina shows no fear and explains that she has accepted her fate. Kinjo, the leader of a cult of ninja assassins, is impressed by the woman's courage and grants her final wish by showing her his face. Paul, who had left with the wrong room key, returns and, upon seeing the situation, hides in the foyer while calling the police. When Kinjo decapitates Kirina (after telling her that she's the first person outside of the cult ever to see his face), Paul first tries to come to her defense, alerting the three ninjas to his presence and then tries to flee. Enraged that someone else has seen his face, Kinjo's men stab Paul, hit him with a poisoned shurkien, and slash his throat, leaving him for dead.Paul awakes in a hospital room, where he is told that the wound will heal, but his claims of seeing Kinjo are met with disbelief by the police. He is soon approached by a man named Takeda (Yoshio Harada), who is an expert on the cult, and Kinjo in particular. Paul later discovers that Takeda is the last in a long line of samurai and has his own score to settle with Kinjo. After the ninja attempt to murder Paul at the hospital, killing six police officers in the process. Takeda and his wife Mieko (Yoko Shimada) decide to take Paul to their family's stronghold, located on an island several hundred miles away. In leaving the city, however, Takeda uses Paul as bait to draw Kinjo out. This leads to a battle on a bullet train in which several passenger cars worth of innocent people are slaughtered by the ninja. Takeda and Mieko defeat the attackers, only to learn that Kinjo was not among them. The ninja leading the attack was Junko, Kinjo's lover, giving the ninja master personal motivation to kill Paul and Takeda.While on the island, Paul spends much time with the drunken blacksmith Oshima, who is constructing a new sword for Takeda (he had furiously broken his own sword following the train fight when police confiscated it as evidence), and the old man teaches him about both smithing and swordsmanship. Mieko explains to him the history of the two clans' conflict as well as the samurai concepts of courage and honor. Mieko is sympathetic toward the gentle and compassionate Paul, the polar opposite of her moody and somewhat-deranged husband, although she remains fiercely loyal to Takeda.Meanwhile, Kinjo decides to find out who hired his clan to murder Kirina. The man he finds (James Saito) is a powerful Yakuza figure who bought Kirina from her father, then ordered her death when she left him after years of servitude. Kinjo, disgusted that he killed an innocent woman over such a petty grievance, kills the man.Three weeks later, Takeda's new sword is ready, and Paul's injuries have healed considerably. When Paul announces that he wants to leave the island and return home to New York, Takeda has him imprisoned and sends a message to Kinjo telling him Paul's whereabouts. Takeda's inexperienced samurai are overwhelmed by the hordes of ninja who arrive on the island, but Takeda finally gets the duel with Kinjo that he has wanted all along. Kinjo stabs Takeda through the torso; Takeda in turn manages to stab Kinjo in the leg, but soon dies.As Kinjo is about to kill a helpless Mieko he is caught off-guard by Paul, whom Oshima had released on Mieko's instructions. Paul stabs Kinjo in the arm, but now finds himself face-to-face with his would-be killer, armed with only a sword he barely knows how to use. With his new-found skills, a lot of luck (the injuries to Kinjo's leg and especially to his arm), and the assistance of a wounded Mieko, Paul manages to decapitate Kinjo, as he had done to Kirina.The film ends with Paul, Mieko, and Oshima starting to head up the hill toward the castle in the distance.