The Tale of Zatoichi Continues

One year after the first film, Zatoichi returns to the town near Joshoji Temple to pay respects at Hirate's grave. While drying his clothes, he is attacked by three brigands, but a one-armed swordsman defeats them and clears the threat.

Later that same day, Zatoichi is hired to massage a powerful lord who is secretly insane. He observes signs of the lord's unstable mental state, which unsettles the lord's retainers. The tension hints at the danger to come.

Zatōichi notes the lord's unstable condition, and the retainers decide to kill him. The decision sets the stage for further violence in town. He then defeats the first three attackers who confront him and retreats to a restaurant to lie low.

After the assault fails, the lord's men escalate and hire local yakuza to finish the job. Zatoichi defeats the initial wave of attackers and retreats to a restaurant to hide from his pursuers. The underworld closes in as new threats loom.

Three prostitutes in the restaurant discuss how many men are now looking for Zatoichi and fear they will lose business. Setsu, however, grows fond of Zatoichi and asks him to spend the night with her, sharing that her father was blind and yet married three women. The mood shifts from danger to a fragile tenderness.

Yoshiro, the one-armed swordsman, enters with a companion and demands that Setsu spend the night with him. Setsu refuses, and Zatoichi re-enters the back room. Yoshiro tells a tale of how Chiyo left him when he was crippled, and Zatoichi shares that he once loved a woman named Chiyo who left him for the man she hated.

In the morning, Setsu remarks that their time together felt almost like a marriage. She urges Zatoichi to slip away now that he is marked for death, but Zatoichi remains and prepares to face the attackers.

Sukegoro, the yakuza boss, returns from travel and confronts Yoshiro, ordering him to leave town. Yoshiro decides to head toward the temple, and Zatoichi follows, with the constabulary alerted to the looming confrontation.

Otane, who is to be married, learns of Zatoichi's return and races toward the temple to find him. On his way, Zatoichi stops by the stream where he fished with Hirate and reflects on his lost friend, as well as Otane's unspoken wish to marry him.

At Joshoji Temple, Otane meets Zatoichi. Yoshiro arrives and proclaims his plan to kill Zatoichi's younger brother, claiming to have killed Chiyo. Yoshiro disarms Zatoichi, but Zatoichi drives his wakizashi into Yoshiro and the constabulary arrives.

The constabulary arrive, and Zatoichi flees with the gravely wounded Yoshiro. Otane brings food to them in hiding, and overhears Zatoichi expressing that he is glad Otane is getting married and wishes her happiness.

Yoshiro dies and reveals that Chiyo is not dead; she left him after he became crippled, and he does not know where she is. The revelation adds a troubling chord to Zatoichi's memories.

Zatōichi seeks Sukegoro and tells him that two men have died for him in his petty crime wars, and that he, too, must die. The film ends abruptly with Zatoichi delivering what is presumably the killing cut.