So Chan, the spoiled son of a wealthy Cantonese general, is lazy and illiterate, yet a natural martial artist. While visiting a brothel, he falls for Yu-shang, a sharp-tongued prostitute who dares to challenge his pride. To win her favor, So Chan presses a contest with Chiu Mo-kei, a powerful government official, trying to outbid him for Yu-shang’s services. In a twist of fate, his bid inadvertently foils Yu-shang’s undercover attempt to assassinate Chiu, who killed her father. Yu-shang’s demand to marry So hinges on his ability to win the title of the “Martial Arts Champion.”
To claim Yu-shang’s hand, So enters the imperial martial arts contest. So’s father helps him cheat on the written exam, while So’s own prowess carries him through the physical rounds. He rises as champion, but just as the emperor is prepared to grant the title, Chiu exposes So’s illiteracy, proving the cheating. The emperor confiscates the family’s wealth and decrees they will live as beggars.
So struggles to adapt to beggar life. Chiu cripples him on the streets, ending his chance to practice martial arts. He is introduced to the Beggars’ Gang by his father, but is ashamed to learn that Yu-shang’s family leads the group. After months of withdrawal, an elderly beggar he had helped before heals his wounds and teaches him the Sleeping Arhat Skill. When Yu-shang is kidnapped again by Chiu, So’s resolve hardens, and he vows to save her.
From there, So deceives the Beggars’ Gang into electing him their new chief by pretending to be possessed by the spirit of Hung Tsat-kung, a legendary former leader. He uses his growing literacy to study the gang’s ancient manual and learns the Eighteen Subduing Dragon Palms, mastering the first seventeen moves; the final move remains unseen in the book.
Meanwhile, Chiu traps Yu-shang in a magical trance to manipulate her as an instrument against the emperor. So leads the Beggars’ Gang across the Great Wall to confront Chiu; they clash in a dramatic showdown, and So manages to rescue Yu-shang at the last moment. His mastery of the palm technique proves nearly enough to defeat Chiu, but the windstorm Chiu conjures tears open So’s practice book, revealing a flip book that animates the first seventeen moves. So realizes the final move must be a synthesis of those steps and unleashes it to obliterate Chiu and save the emperor.
In the ending, Yu-shang accepts So’s proposal, and the emperor asks what reward he desires. So chooses to remain as the king of beggars, even as the emperor worries about the power he could wield over the people. So reassures him: as long as the people are cared for, there will not be enough beggars to threaten the throne.
The duo is finally seen wandering the streets with a large family, aided by an imperial tablet the emperor has given them to compel rich locals to contribute.
