After eighteen years of solitude, renowned warrior-maiden Shu Lien (Michelle Yeoh) emerges from retirement and travels to Peking, where the Green Destiny-the legendary sword of her deceased love Li Mu Bai-is located. In the forest, Shu Lien's carriage is attacked by several warriors from the West Lotus clan. As she fights them, a masked horseman comes to her aid, and together they defeat the attackers, revealing one attacker's identity to be a young man called Wei Fang (Harry Shum, Jr.).At the tower of the West Lotus warlord Hades Dai (Jason Scott Lee), a young woman named Snow Vase (Natasha Liu Bordizzo) arrives asking to join his ranks. As Dai approaches, she draws a sword and attempts to kill him, although he easily fights her off, and she flees. As Wei Fang makes his way through the forest, he is approached by a blind enchantress (Eugenia Yuan), who orders him to take her to Dai. She tells Dai that his great sword is surpassed by the Green Destiny and prophesies that if he is to rule the Martial World, he must obtain the sword. Dai is reluctant to storm the home of the emperor's brother (The House of Te), but the enchantress tells him to send Wei Fang, as the boy and the sword are bound by destiny itself.Shu Lien arrives in Peking, and is taken to the house of Sir Te, a man like a father to her, who has recently died. Te's son greets her and reveals that the Green Destiny sword is kept on display at the house, also recalling the unmentioned love between Li Mu Bai and Shu Lien. That night as Wei Fang breaks into the house and attempts to steal the sword, Snow Vase appears and fights him. During the fight, Snow Vase sees a birthmark on Wei Fang's chest, which distracts her and allows him to escape. She calls for help and Shu Lien arrives and captures the boy. Snow Vase approaches Shu Lien and asks her to train her in the Iron Way. Wei Fang is imprisoned in a cage in the courtyard of Te. Shu Lien wants to send the sword away to the Wudang temple, up in the mountains but the son of Te, says he promised his father to protect the sword within the walls of the house. The sword stays. Shu Lien sends ads for Iron way warriors to join the mission to protect the sword.At a tavern, Meng Sizhao (Donnie Yen) (known as Silent Wolf in the West), the horseman who came to Shu Lien's aid, finds the ad for warriors to join the mission protecting the House of Te. One warrior offers his thirty swordsmen for a high price, and attacks when rebuffed. Four warriors join Silent Wolf in the fight, and he recruits them to his cause: Flying Blade (Chris Pang) of Shantung; Thunder Fist Chan (Woon Young Park), famed in Zhejiang; Silver Dart Shi (JuJu Chan), famed in Fuzhou; and Turtle Ma (Darryl Quon), famed in that tavern. Together they defeat the attackers and join Silent Wolf in the call from the House of Te.Shu Lien begins Snow Vase's training. That night, Silent Wolf and his warriors arrive at the Te compound. Shu Lien is shocked to see Silent Wolf, her former betrothed, as he was thought to have been killed by Hades Dai many years before. He explains that he was in love with Shu Lien, but knew that Mu Bai was her true love, and had feigned his demise to seek a life of enlightenment in the mountains, as he knew that as long as he was alive, Li Mu Bai would not have asked Shu Lien for her hand.Hades Dai rages that Wei Fang has failed in his raid, and sends his elite warrior, Mantis (Veronica Ngo), to retrieve the sword. She arrives with her raiding party, and Silver Dart Shi and Turtle Ma are killed in the attack. Snow Vase attempts to free Wei Fang from his cage in the courtyard, but she is attacked by Mantis, and Wei Fang reveals the sword's location. The blind enchantress fights Shu Lien in the sword chamber, killing Sir Te's son (Gary Young) when Shu Lien refuses to relinquish the sword.As the inhabitants of the House of Te mourn the loss of their dearest companions, Snow Vase explains her connection to Wei Fang's past. His birth mother was the legendary swords-woman Han Mei (Shuyu Chang). However, as a baby, he was swapped for the infant Snow Vase by her mother, a concubine. Han Mei raised Snow Vase as her own daughter, but never stopped looking for her son. Eventually finding him at West Lotus, she was mortally wounded by Hades Dai and, as she died, implored Snow Vase to find Wei Fang. Snow Vase still believes in the goodness of Wei Fang and implores him to cut ties with the West Lotus.Knowing that Dai will send people to kill Wei Fang, Snow Vase frees him, and is horrified to later hear that he has stolen the sword. Silent Wolf tracks the boy down and they fight on a frozen lake. Wei Fang's master, Iron Crow (Roger Yuan), arrives and wounds Silent Wolf, allowing Wei Fang to escape and reach West Lotus.Wei Fang offers the sword to Hades Dai, but then attempts to kill him with it to avenge his mother. Shu Lien and the others arrive and fight Dai's army. Shu Lien fights the enchantress and kills her, using her skills to see through the witch's illusions. Mantis kills Flying Blade and Thunder Fist, then fights Snow Vase, who defeats her but is badly wounded. Silent Wolf fights Hades Dai on the tower, eventually killing the warlord with his own sword as he reaches for the Green Destiny.Snow Vase survives her injuries, and joins Shu Lien, Silent Wolf and Wei Fang as they take the Green Destiny to the Wudang Mountains where it will be kept safe yet again.