The evil Lord Conqueror, head of Conqueror's Clan, is given a prophecy by Mud Buddha when quizzed about his delayed duel with Sword Saint. The prophecy states that if Conqueror finds two young children by the name of Wind and Cloud, he will have good fortune. Mud Buddha provides the birth charts of these two and gives him a puzzle box stating that finding Wind and Cloud is but one half of his destiny, the box will provide him with the latter half once he unlocks it. Conqueror issues an order that every boy with a birth chart matching Wind's or Cloud's must become a disciple of the Conqueror's Clan. Whispering Wind is identified as the son of long time rival Whispering Prince, who Conqueror had beaten 2 years previously while also stealing his wife. As they fight again for Prince's Blizzard Blade, Conqueror reveals he only took Prince's wife to anger him into battle to possess the blade. At the climax of the duel, Prince's wife kills herself and Prince is captured and killed by the fire beast in the nearby cave. Conqueror finds Whispering Wind has fainted and claims him. Striding Cloud's father, a blacksmith named Striding Sky, is forging the Ultimate Sword and completes the blade just before Conqueror's forces raze his village. As Sky is killed, he reveals that the sword can only be used by using his own bloodline, and Cloud is taken by the invading forces.
Ten years pass, and Wind and Cloud are now both fully grown and highly skilled martial artists, raised by Lord Conqueror long with his daughter Charity and adopted son Frost. The 3 sons act as Generals in Lord Conqueror's army. Wind and Charity begin to form a relationship, but she is seduced by Cloud and secretly has an affair with him. Conqueror is angered by his inability to open the puzzle box, and the disappearance of Mud Buddha. He sends Frost and Wind to find him while Cloud is sent to claim the Unchallenged Sword and kill the clan leader, leading closer to completing his collection of powerful weapons in his Sword Graveyard. Cloud succeeds while Frost and Wind find Mud Buddha, now disfigured by boils as punishment from the Gods for revealing too much about the future to others. Later, Mud Buddha is taken by a masked fighter who easily repels both Frost and Wind. The captured Mud Buddha unlocks the puzzle for Conqueror and reveals that "the dragon is powerful but will be stranded when wind and cloud become a storm" therefore ending Conqueror's tyranny. Realizing it refers to Wind and Cloud and unwilling to accept his fate, Conqueror plots to destroy them both.
Upon realizing Cloud's desire for Charity, Conqueror decides to marry her to Wind in hopes of Wind and Cloud killing each other. Cloud is angered by the announcement of the marriage. On the day of the wedding, Cloud abducts Charity. Conqueror tells Wind to fight for his wife if he is a man. Wind and Cloud engage in a battle, and Lord Conqueror tries to kill Cloud in their duel, but Charity sacrifices herself to save him.
As Wind quietly grieves for Charity, Cloud fights the Phoenix family for the Ice Vigor to use it to preserve Charity's body, but is soon found by Conqueror. As they fight in a temple in the desert, Cloud's Palm style proves to be useless against Conqueror without any source of liquid at the area. After the bones in his left arm is shattered by Conqueror, Cloud rips off the arm and uses the blood splatter to empower for his palm technique to create an opening for escape. Cloud's unconscious body is then discovered by Muse and her father, Summit Yu. As they nurse him to health, Yu discovers that the Fire Beast Arm he has trained to perfection rejects him and wishes to be bonded to Cloud, and calls on specialists to transplant his arm onto Cloud.
Unable to find Cloud, Conqueror moves on to destroying Wind, who he secretly poisons and sends on a mission to claim the Blood Bodhi fruit. As the poison takes its toll, Wind remembers the truth about who killed his parents, and uses the Blood Bodhi fruit that grows in the cave to heal himself as well as make himself even stronger. He then defeats the fire beast who killed his father using the Blizzard Blade beside his father's corpse. Cloud trains his new arm under Muse's kindness before deciding to head back to Conqueror's kingdom.
Conqueror, believing himself free of the prophecy, challenges and defeats Sword Saint after the latter is distracted by Muse. Frost arrives and announces his discovery that it was Conqueror who kidnapped Mud Buddha and framed Wind and Cloud. Conqueror, now deluded into the belief he is invincible, kills Frost who attempted to leave the clan. Soon afterwards, Wind and Cloud meet upon the steps to Conqueror's main hall and, united by their common enemy, confront Conqueror. As the fight spills over into the Sword Graveyard, Wind and Cloud are almost outmatched by Conqueror's superior sword skills. However, the blood from a cut on Cloud's arm reveals to him the location of the Ultimate Sword (which Conqueror unknowingly had amongst the standard weapons littering the ground). Wielding Blizzard Blade, Cloud rejoins Wind in the battle and they both defeat Conqueror, with Wind stopping Cloud from landing the death blow so Conqueror is left insane and tormented by the ghosts of those he has killed, including his beloved Charity.
Ekin Cheng and Aaron Kwok returned for the sequel, reprising their respective roles as Wind and Cloud. The film was helmed by the Pang brothers and followed the Japanese Invasion story arc of the comics.
They were joined by newcomers to the franchise Hong Kong Cantopop stars Nicholas Tse, Charlene Choi, newcomer Tang Yan and veteran actor Simon Yam. Tse played the villain Heartless while Yam played his father, Lord Godless.
