The opening credit sequence is fired by an electrical storm that tantalisingly introduces imagery to come as a bloody female body hangs from a tree and a cackling maniac in a skull mask jumps around like he's an attention deficit sufferer who's just discovered crystal meth. The camera finally comes to rest on a blood soaked blade attached to a cross.

The story then kicks in as a twisted revenge piece that's fuelled by the rivalry of two masters Lung and Tan. The setting is a period Chinese village. Master Lung wants to outdo Master Tan at the lantern championships this year and through bribing an old master with silver pieces gets in touch with a lantern craftsman who turns out to be an old enemy harbouring a grudge.

Meanwhile, accompanied by spooky music the skull mask maniac breaks in on a gal who he knocks out and stabs with one of his claws before sneaking a look up her dress and laughing even harder. Back at his fantastic dungeon/workshop that has a waterway running through it, he drags a thick blade across her skull that causes blood to drip down her naked body. He then starts to remove large patches of her skin which he taunts her with when she regains consciousness. The Master's house is soon put under surveillance by the local police force led by Sergeant Poon. This situation really annoys Master Lung. Soon, a small body count develops which eventually leads to Tan fighting Lung when the formers sister goes missing. In fact, the fighting escalates all over the place with barely a break for the man in the mask to abduct Lung's wife who he subsequently flays. Holding her skin up to the light he lovingly admires a mole that used to be on her back. Lung and Tan eventually team up to have a slo-mo fight with the evil lantern maker who by this stage has produced four beautiful lanterns that happen to resemble the four women who have gone missing. Tan is impaled on a fan frame and it takes the cops to turn up, the roof to cave in, and everyone to be set on fire before the crazed craftsman can be subdued. The entire experience causes Lung to denounce all his material possessions and to leave on indefinite travels in the hope of calming his soul.