In the heart of ancient China, a powerful warlord unites the fragmented kingdoms into a vast empire, becoming known as the Dragon Emperor. In his quest for dominance, he wages a brutal civil war, establishing the Qin dynasty while ruthlessly ordering the destruction of invaluable books and scrolls. Gripped by fear that his death might undo all his ambitious plans, the Emperor commands the sorceress Zi Yuan to seek the fabled Oracle Bones, believed to grant eternal life, accompanied by his loyal second-in-command, General Ming.
As fate would have it, Zi Yuan and Ming develop a deep bond during their mission, much to the Emperor's dismay, who has his eye on Zi Yuan for himself. When one of the Emperor’s servants catches a glimpse of their secret affair, he exacts vengeance by executing Ming. Anticipating this tragic turn of events, Zi Yuan curses the Emperor and his army, transforming them into the legendary Terracotta Army rather than granting him the immortality he desired.
Fast forward to 1946, where we find Alex O'Connell, the son of Rick and Evelyn O'Connell, and his archaeology professor, Roger Wilson, who have inadvertently uncovered the Dragon Emperor's tomb. Their adventure takes a perilous turn when a mysterious woman attacks them, but they manage to transport the sarcophagus to Shanghai. Concurrently, the British government asks the O'Connells to return a mystical gemstone known as the Eye of Shangri-La back to its homeland.
Set against the vibrant backdrop of the Chinese New Year in Shanghai, the O'Connells soon discover that Wilson is not who he seems. He is in league with a rogue military faction led by General Yang and Colonel Choi. Aiming to exploit the turmoil in post-war China, Yang believes he can resurrect the Dragon Emperor using the Eye of Shangri-La, which holds mystical waters capable of reviving the dead.
The resurrection of the Emperor begins, and he wastes no time in eliminating Wilson, solidifying his reign of terror. With help from the enigmatic Lin, a woman who previously attacked Alex, the O'Connells set out to thwart the Emperor’s plan. Lin reveals that she holds a precious weapon, a cursed dagger, that could end the Emperor's threat once and for all.
Joined by Evelyn's witty brother, Jonathan Carnahan, the group embarks on a treacherous journey to a stupa in the Himalayas, which is said to lead them to Shangri-La. Enlisting help from yetis, summoned by Lin, they stand their ground against Yang's forces, but the Dragon Emperor catches wind of their quest and seeks the location of Shangri-La himself. In a desperate act, Alex triggers an avalanche, slowing down the Emperor’s pursuit.
Upon reaching Shangri-La, they discover that Zi Yuan still resides there and possesses the ability to heal Rick's grave injuries. Unbeknownst to the group, Lin is actually Zi Yuan’s daughter, both being blessed with immortality from the sacred waters. When the Emperor arrives, he bathes in the magical waters, regaining his full power and transforming into a formidable three-headed dragon. He hijacks the dagger, kidnaps Lin, and returns to his tomb, ready to awaken the Terracotta Army for his plans of world domination.
In a climactic showdown, the O'Connells and Zi Yuan chase the Emperor to the Great Wall. With the aid of the Oracle Bones, Yuan musters the courage to relinquish her and Lin's immortality in order to summon an undead army composed of the Emperor’s former enemies, led by a resurrected General Ming. As the two undead factions clash, Alex bravely rescues Lin while Yuan confronts the Emperor, wresting the dagger from him before succumbing to a fatal wound.
In an intense battle, Rick and Alex finally confront the Emperor within the walls, while Evelyn and Lin face off against Yang and Choi. Lin ingeniously throws Yang into rotating gears, leading to both villains meeting their demise. Ultimately, Rick and Alex overpower the Emperor, plunging the cursed dagger into him, which results in a massive explosion, destroying both him and the Terracotta Army once and for all. Ming and his undead soldiers rejoice as they enter the afterlife.
After their harrowing adventure, the O'Connells and Lin return to Shanghai, where Alex and Lin embark on a budding romance. Meanwhile, Jonathan moves to Peru with the Eye of Shangri-La, completely unaware that the mysteries of mummies await him in his new adventure.
