One year after the first film, Zatōichi travels to the town near the Joshoji Temple to pay respects at Hirate's grave. As he dries his clothes, three brigands strike, and the lone swordsman swiftly dispatches them. Later that day, he is hired to give a massage to a powerful lord who, unbeknownst to everyone, is unstable. The lord's retainers decide to kill him. Zatōichi defeats the first three attackers, then retreats to a nearby restaurant. When the initial assassination attempt fails, the lord's men hire local yakuza to finish the job. Learning of this, Zatoichi muses that he would have kept quiet if they had simply asked him to do so.
Inside the restaurant, three prostitutes discuss how Zatoichi’s presence has stirred trouble and could ruin their business. Setsu grows fond of the blind swordsman and quickly asks him to spend the night, sharing stories about her father, who was blind yet married three times. While Zatōichi sits in a back room, the one-armed swordsman, Tomisaburô Wakayama as Yoshiro, and his companion enter the scene. Yoshiro tells a short tale of how Chiyo left him after he became crippled. Zatoichi says that he too loved a woman named Chiyo, but she left him when she learned he was blind, and he once sought out the man she hated most and attacked him. He leaves with Setsu, and in the morning, Setsu remarks that it feels as if they were married.
Yoshiro, staying under Sukegoro’s shadow, returns so the yakuza boss can weigh in on the new trouble. Otane, Masayo Banri as Otane, who is to be married, learns Zatoichi has come back and races toward the temple. On the way, Zatoichi passes the stream where Hirate once fished with him, reflecting on their fragile friendship and on Chiyo—the woman he loved who was taken from him. At the temple, Otane meets Zatoichi, and Yoshiro arrives with a fresh resolve to kill his younger brother in revenge for crippling him. Zatōichi disarms Yoshiro, but the brother is stabbed by Zatoichi with his own wakizashi as the constabulary arrives. The two flee with the wounded Yoshiro, and Otane brings food to them in hiding, overhearing Zatoichi say that he is glad Otane is getting married and hopes she will be happy in life.
The confrontation is far from over, and Yoshiro dies after revealing that Chiyo is not dead; she left him after his crippling injury, and he does not know where she is. Zatoichi then seeks out Sukegoro, Eijirō Yanagi the yakuza boss, and tells him that two men have died for him in his petty crime wars, so he too must die. The film ends abruptly with Zatoichi delivering what appears to be the killing cut, leaving the fate of all involved unresolved and the danger hanging in the air.
