In 1970s-era Japan, three children, Kazuma Kiryu Masakatsu Funaki, Akira Nishikiyama Mikio Osawa, and his younger sister Yuko Nishikiyama, are raised together in Sunflower Orphanage run by Shintaro Kazama Hirotaro Honda (a.k.a. Fuma). In the summer of 1980, Yumi Sawamura Ayaka Maeda, a young girl whose parents were accidentally shot and killed during a gang's shootout, joins them in the orphanage. Following a yakuza tradition, the honorable Kazama secretly raises orphans whose parents he has directly or indirectly killed. In return, the children love him as a father and he eventually inducts Kiryu and Nishikiyama into the Dojima Family, a Tojo Clan affiliate of which he is a senior officer.
Years later, the promising Kiryu quickly rises through the yakuza hierarchy and earns the nickname the Dragon of Dojima for the dragon irezumi tattoo on his back (hence the original title Like a Dragon). His childhood friend Nishikiyama is torn between loyalty for his kyodai (yakuza "brother") and jealousy against the one who has always been Kazama's protégé. Another subject of rivalry between the two friends is their secret love for Yumi, who looks up to them as her older brothers. In order to remain close to both of them, Yumi leaves the orphanage in 1990 and moves to Tokyo's red-light district Kamurocho, where she gets a job as a hostess at Reina's high-class bar Serena.
On October 1, 1995, Kiryu announces to his friends that he is ready to create his own yakuza family, which only lacks the go ahead from the Chairman of the Dojima Family, Sohei Dojima Harumi Sone. Later that night, Dojima kidnaps Yumi from Serena, with Nishikiyama attempting to interfere only to be restrained by Dojima's bodyguards. When Nishikiyama eventually reaches the Chairman's office, he finds his boss raping Yumi and shoots him dead. Kiryu, who was at a meeting with Kazama before getting a worried call from Reina, arrives to find Dojima's dead body on the ground, Nishikiyama in shock, and Yumi curled up in fear. Kiryu decides that he will take responsibility for Dojima's murder in order to protect Yuko, who needs her brother Nishikiyama as she is about to get a desperately needed operation for her heart. Kiryu orders the pair to leave before the police arrives and holds Nishikiyama's gun, ready to surrender. The police conclude that the shooting is none of their concern, and Kiryu is sentenced to prison.
While en route to the hospital, Yumi has a flashback to her parents' murders and tries to jump out of the car. Nishikiyama calms her down, but she then escapes from the hospital and goes back to the only place she feels safe: Sunflower Orphanage, which is now closed and in ruins. The film ends with Kiryu nearing the end of his ten-year sentence and awaiting release.
