Lo Ka-yiu, Tony Leung Ka Fai, an advertising designer, is convicted of manslaughter after accidentally pushing the robber of his father's grocery store into the street, where a passing bus runs him over, and he is sentenced to three years in a Hong Kong prison.
Inside the detention facility, he is assigned to work and befriends Chung Tin-ching Chow Yun-Fat, a prisoner who operates in the laundry. Yiu asks to transfer to the laundry so he can be closer to Ching, and there he witnesses a member of boss Micky’s triad William Ho gang steal scissors from Ching to use as a weapon. Yiu informs Ching who retrieves the scissors, but the confrontation leaves Yiu bullied by the gang members.
Guards uncover prohibited items during a cell inspection, and several inmates, including Yiu, Micky, and Bill, are brought before ranking warden Hung Roy Cheung Yiu-Yeung, known to the prisoners as “Scarface.” Hung attempts to recruit Yiu as an informant, but the offer is declined. He questions Micky, proposing that his men search for missing tools in the workshops in exchange for moving one of Micky’s rivals to a different prison. As a way to pin the blame on someone, Micky suggests that Yiu fault one of Bill’s associates. Hung accepts the deal and ships several triad members to another facility as a form of punishment.
That night, Yiu is dragged into the cell’s lavatory by Micky’s men and beaten. Ching tries to intervene but cannot stop them. A guard finally intervenes, and Yiu tells him he merely slipped, leaving the matter unresolved for the moment.
Yiu’s girlfriend visits and reveals she is leaving to study in England for nine months; he cannot persuade her to stay. Later, Micky approaches Yiu in the laundry to demand compensation for the punishment of his men. Yiu publicly accuses him of calumny and a brawl erupts. Yiu fends off his attackers with a shard of glass, but in the process he injures Ching.
Both Yiu and Ching are summoned by the warden. When asked who started the fight, Ching accuses Hung of manipulating Yiu. The warden promises to investigate and places both men in temporary solitary confinement as punishment. Micky is moved to another prison, and the immediate tension cools.
A year later, on New Year’s Eve, Ching shares his backstory: four years earlier he caught his wife prostituting herself and, in the aftermath, inadvertently killed her before attempting suicide, yet he was charged with murder. Their son now lives with his grandmother and visits him in prison.
The following summer, Micky is transferred back to the same facility and continues to seek revenge. Yiu asks Hung to move him and Ching to a different prison, but Hung refuses, arguing that triad trouble is being exaggerated. During the next inspection, Hung denies the presence of triads among the inmates and asks for a report, leaving Yiu and Ching to stay where they are.
Eventually, the triad members stage a hunger strike to protest a cigarette price hike, and Micky’s men, along with other prisoners, join in. Hung confronts Micky and pressures him to end the strike, threatening to isolate all triad leaders if he implicates them. Micky refuses to turn informer and instead accuses Yiu of instigating the unrest. Hung whispers to Ching that he would turn them in if needed. When the prison warden enters to restore order, the inmates resume eating; Micky complies, but Hung warns Ching to eat as well, which enrages Ching and triggers a heated confrontation. The guards are unable to act as Hung has locked the cell.
Back in their cell, Micky’s men beat Yiu and Ching, while the other prisoners demand a fair fight between Micky and Ching. With the odds stacked against him, Micky’s henchmen intervene, but Ching ultimately gains the upper hand. A fierce struggle ensues: a drop-kick from a bunk bed knocks Hung to the floor, and Ching, laughing maniacally, pounces on Hung and bites his ear off.
Months later, Yiu is released to a warm reception from his family and his girlfriend. As they leave the prison, they glimpse Ching being moved away in a hospital transport after the recent clash, only to be brought back to the prison in a subsequent bus.
