The Emperor dispatches his favourite, wicked Kao Chiu, to the sacred mountain to exorcise the evil behind the terrible plague that grips China. Kao Chiu discovers an ancient temple, its doors sealed shut on the orders of a previous emperor. Within is a pit believed to contain the souls of nine dozen rebellious knights. The souls are scattered over China, now reborn as heroes who will take a stand against the corruption that has gripped the empire. One such hero might be Lin Chung, an honourable officer in the imperial army. However, Kao Chiu hatches a plot to have Lin Chung discharged from the army in disgrace.

Yang Chih - known as 'Blue Face' - is one of the few honourable men in government. Kao Chiu has banished him to a distant province - with orders to capture and kill Lin Chung. Lin Chung, searching for his wife Hsiao Lan, is offered refuge by Wang Lun, leader of the rebel warriors of Liang Shan Po. However, Yang Chih has captured Lin Chung's wife: Lin Chung must face Yang Chih in a duel that will decide the fate of them all.

With Lin Chung now at Liang Shan Po, the union of the rebel knights has begun. Hearing the news, 'Tiger Hunter' Wu Sung heads for the water margins. Shih Chin - 'Tattooed Dragon' - has already joined the mountain bandits led by Chu Wu, but in pursuit of his true love he is captured and faces certain death. Now Lin Chung must unite with Wu Sung and Chu Wu to execute the daring rescue of Shih Chin.

Evil Kao Chiu, not content with being Viceroy and head of the army, plots with his brother-in-law to become Prime Minister as well. Yang Chih -'Blue Face' - is given a chance to redeem himself after his earlier failure: he must guard the tax collections destined for Kao Chiu. The good rebels of Liang Shan Po soon learn that a huge fortune of jade and gold is on the move - as does the respected nobleman Chao Kai. With Chao Kai ride Hu San-Niang and Lu Ta, the former head guard of Tsang Chou jail. Lin Chung is on a collision course with Chao Kai - and Yang Chih.

Kao Chiu, desperate to retrieve the stolen treasure, dispatches his forces to all corners of the empire. He discovers that Lin Chung has joined the bandits of Liang Shan Po, and that Chao Kai was involved in the theft. Wang Lun, the leader of the rebels, hears that Chao Kai has been arrested, and sends Lin Chung to rescue both the fortune and the nobleman. Kao Chiu lures Wang Lun into a trap which will deliver the defences of Liang Shan Po, the outlaws, and the treasure, into his hands.

Kao Chiu is sent the head of Wang Lun. Furious, and suspicious of the good judge Sung Chiang, Kao Chiu orders him to investigate Yen Po-Hsi, Wang Lung's former lover. Working for Kao Chiu, Yen Po-Hsi seduces Sung Chiang. stealing vital information regarding Liang Shan Po. The judge is forced to kill the girl, then flees, seeking refuge with Lord Chai Chin and his mighty servant, Li Kwei, the Black Whirl-wind'. However, only Lin Chung's intervention at the battle of the Shallow River of the Dead can now save the judge.

Sung Chiang, not yet ready to join the bandits of Liang Shan Po, seeks the counsel of his friend Hua Yung, prefect of Ching Feng. Knowing of Hua Yung's fairness, Kao Chiu has appointed an additional, corrupt prefect. The new prefect's wife, Hsiu Lan, has been captured by bandits. Shih Chin - 'Tattooed Dragon' - has joined the group of outlaws, who also capture Sung Chiang. Shih Chin persuades the bandits to release their captives. However, Hsiu Lan tells her husband that Sung Chiang and Shih Chin were her captors, Lin Chung must now rescue them both, bringing them to the justice and honour of Liang Shan Po.

Kao Chiu fumes, seemingly unable to destroy his enemy, Lin Chung. However, Kao Chiu's arm is long, and his cunning boundless. Newly appointed and ambitious, Huang Wen-Ping has a plan of his own. He will capture the good judge Sung Chiang and thus lure Lin Chung from the safety of the water margins of Liang Shan Po. Sentenced to Chiang Chow jail, Sung Chiang must now keep his wits about him.

Tortured and beaten, Sung Chiang faces execution at the hands of evil Huang Wen-Ping. As Tai Sung hurries to Liang Shan Po with the news, Wu Sung - the 'Tiger Hunter' - arrives at Chiang Chow jail, intent on freeing Sung Chiang himself. However, Wu Sung is captured, and Liang Shan Po's plan for rescue is intrinsically flawed. As Lin Chung and the other rebels approach the jail, Kao Chiu is waiting for them.

Kao Chiu's evil reign has spread far and wide, driving the ruthless to yet more corruption. Chin Mao Hu is such a man. He and his cruel bandits have spread hunger and death across the province. Chin Mao Hu goes to Kao Chiu, seeking an officer's commission in the imperial guard. In return, Chin Mao Hu promises to deliver Liang Shan Po into his hands. Lu Ta, the 'Flower Priest', encounters Yang Chih - 'Blue Face' - who is roaming the area in disgrace. Lu Ta's heart hangs heavy for the 'songbird' held captive by the bandits. Once enemies, Lu Ta and the honourable 'Blue Face' plan to overthrow the bandits of Two Dragon Mountain.

Kao Chiu's obsession with the destruction of Lin Chung and the outlaws of Liang Shan Po continues to grow. An investigation into the supporters of the rebels reveals Hua Yung as a major conspirator. In hiding at a water circus, Hua Yung is travelling to the safety of Liang Shan Po. Kao Chiu questions Hua Yung's brother-in-law: if he does not hand over Hua Yung, his entire family will be killed.

Kao Chiu, consumed by greed, is now plotting to overthrow Prime Minister Chi Ching. Kao accuses the Prime Minister of being lax in collecting taxes, and allies himself with Lord Chu and his three warrior sons. Together they raid several of the tax collections en route to the capital, ensuring that they leave Liang Shan Po's flag. With the good rebels of the water margin implicated, Lin Chung must investigate - and Kao's minions will be waiting.