Japanese troops invade a small village in China but the massacre is added upon by the presence of a Blood Demon who's possessed one of the soldiers. Chor (Lau Kong) sacrifices himself in order to stop the demon, the cave it originated from is sealed up and his young son Kong is raised by another family. When we cut to the Cultural Revolution in progress many years later, we see Kong (Lam Ching Ying) being viewed upon with jealousy by the other son of his adoptive family, Tung (Tony Leung Kar Fai). The latter therefore engages himself heavily in the revolution movement and sees his chance to expel Kong by claiming he's an anti-revolutionary. However the seal that has kept the Blood Demon out is broken and it goes on its possession rampage, eventually planting itself firmly in General Lui (Guan Shan). Chor and Kong has to unite, forget past differences and get Lui's daughter Shan (Joey Wong) to believe her father is an evil in red...