The film opens with a fish tale narrated by a low-class metalsmith in a tavern in Joseon-era south-western Korea. The scene then cuts to a street circus, where an elegant masked swordmaster Gang Dong-won captivates his market-place audience. Undercover detective Ahn Sung-ki and his protégé Ha Ji-won are tracking a suspected money-counterfeiting gang when the masked duelist ends his show by killing a government official who handles the kingdom's currency metal cast.
The swordmaster escapes when a cart crashes and disgorges a mountain of counterfeit coins, sparking public uproar. The distraction works, but Namsoon fights the escaping duelist, proving herself a master of martial arts wielding a pair of long knives. She manages to cut off a quarter of his mask and glimpses an exposed eye before he slips away. She and her team are left with the bodies of the counterfeiting gang, seemingly massacred in an instant by an unknown duelist.
It is revealed that counterfeit coins are spreading through the populace, driving hyperinflation and threatening the monarchy. Police are determined to find the culprits, suspecting an insider in the government. Through a secret connection, the detectives obtain a picture of the duelist, famed for his "Sad Eyes," which Namsoon recognizes from her earlier encounter. The suspicion lands on Minister Song Pil-joon, a powerful figure at the defense ministry, and this is confirmed when Namsoon spots the duelist entering Song's manor.
The detectives fail to chase the duelist in a direct pursuit. Later, as Namsoon walks alone, Sad Eyes emerges from the shadows and teases whether she is following him “because you like me.” A tense duel ensues, growing unexpectedly affectionate. He finally vanishes after giving her a small cut on her clothing that reveals a glimpse of her cleavage. Namsoon convinces her team to infiltrate Song's palace, and the plan succeeds with Namsoon being the only one who can pass as a mistress. She ends up serving the duelist in private, a task she handles with bluntness and humor.
Minister Song [Song Young-chang] calls the duelist, interrupting Namsoon's private session. Song proves to be a formidable swordsman, the only one who can outmatch the duelist. The two men discuss a larger plot: Song intends to overthrow the current king and replace him with his future son-in-law, and the duelist has been involved since childhood. Song reminds Sad Eyes that the duelist can kill him anytime—hinting that the duelist could be the destined royal successor—and declares that he has always loved the duelist as a son.
After publicly assaulting Sad Eyes, Namsoon is removed from the case by her director, only to be secretly tasked with gathering final evidence of Song's involvement. Eavesdropping on Namsoon's pursuit, the duelist provides the needed proof in a covert meeting, sacrificing his own destiny in the process. Namsoon realizes her growing feelings for Sad Eyes, while the aging detective Ahn cautions her that he is a criminal and that romance could be dangerous.
The climax erupts as armed police surround Song's manor and attack the duelist, Song, and other corrupt officials. In a decisive moment, the minister attempts to reveal the duelist’s true name, but authorities separate them, and Ahn kills the minister.
After the battle, Namsoon learns that the duelist is dead, a revelation that leaves her numb. She returns to the lanes where they first met, haunted by his memory, until the duelist unexpectedly reappears before her. Namsoon senses she can finally voice her heart, and they share a moonlit, cinematic reunion and dance in a moment that feels almost mystical amid the lingering violence > like they were making love. > disappeared suddenly.
The closing image echoes the opening allure of fate and memory: Namsoon and Sad Eyes glimpse one another from a distance in the marketplace, suggesting that their bond transcends the chaos of the pursuit and the politics that sought to tear them apart.
