The Blood Demon Sheung KWUN KING NGOR has been caught by the Chi-sword and Ching-sword. He has been frozen in a cave. Chivalry becomes the main discipline of the world. However due to the natural disaster, the Blood Demon gets a chance to be released. He also sets other demons free and this endangers the peace of the world. This incidence shocks the gods. Master TIN CHI invites other gods to work co-operatively against KING NGOR. The manager to chop him down. They put his spirit in the stone of LUI WO. To ensure that he cannot do any harm, the stone is sent to the Arctic region, guarded by the snow-ape. After realising that the Blood Demon can be helpful to him, HIN YUEN FA WONG goes to get the stone with CHING SAU MO SAp1s assistance. HIN YUEN fights with the snow-ape and takes away the stone. As the stone suddenly sparkles, he drops it and it falls to Miu Keung……

Master TIN CHI is informed that the Blood Demon has escaped. However he has become a god and cannot do any killing, so he hopes that the Blood Demon can be killed in the future. SHEK SAN is discriminated due to his strange birth. He is treated as a slave and is tortured by the Chief1s daughter FUNG WONG and AH DONG. One day, TAl LIK is bit by a spider. He drives SHEK SAN to a cave to get the ice-worm to cure him. SHEK SAN is bit by it and the others leave him behind, thinking that he is dead. When he is on the brink of death, PUN PIN appears and saves him. When he arrives at the village, the others are shocked and think that he is a demon. He is driven away. PUN PIN turns up as SHEK SAN is depressed. He claims that SHEK SAN can act as his student and learn from him. However he sets the term that SHEK SAN must kill FUNG WONG and AH DONG. SHEK SAN is reluctant to do so……

Next day, AH DONG treats SHEK SAN bad again. SHEK SAN tries to tolerate but later he kills AH DON~ accidentally. In fact it is set up by PUN PIN. PUN PIN's mistress KAU MAY YIU WU seduces young men to take their essence to make her strong. YU YING NAM of the Gang of Ngor Mei determines to kill her for justice. She impersonates a young man to deceive her and finally catches her and takes her to the sacred meeting. PUN PIN rushes to cure her but he is defeated by Master YUEN YUEN. He leaves angrily and determines to take revenge. Hatred grows between the gods and demons. To stay away from being caught, SHEK SAN takes refuge in a cave and pro?mises to be PUN PIN's student. PUN PIN reminds him to stay close to the stone of LUI WO which will help him learn quickly. Therefore he stays there.

SHEK SAN does not like PUN PIN but he is cursed and is controlled. How?ever evil mind grows gradually in his heart. This makes his good friend SUI PAK suspicious. SHEK SAN is confused and rushes to seek help from an old monk. PUN PIN follows him closely and carries out massacre. SHEK SAN hates him and refuses to continue learning from him. PUN PIN threatens him with SUI PAK's life. He does not know what to do. Among the gods, there are two schools of attitudes towards the Blood Demon. The Ngor Meis suggest eliminating him while the Ching Shings suggest convincing him to be good. They search everywhere to find him. YING NAM is Master YUEN YUEN's eldest student. She is instructed to find SHEK SAN but she is hurt by PUN PIN who lurks her. Fortunately SHEK SAN escorts her. YING NAM is impressed by him, thinking that he is a kind man but she does not know his real identity. Later it is found that SHEK SAN is the Blood Demon……

On their way to Ngor Mei, YING NAM is trapped by PUN PIN. He releases SHEK SAN only. PUN PIN tells SHEK SAN that he can shirk all evil minds unless he takes a wash in Blood Waterfall of Tung Yeh Island. As SHEK SAN does not want to be an evil-minded demon, he determines to follow PUN PIN1s suggestion. In fact PUN PIN lies to him. If SHEK SAN does what he is told, he will transfigure into the Blood Demon immediately. If then he takes his essence, PUN PIN will become the strongest demon. MO SAP discovers that PUN PIN has destroyed HIN YUEN. He wants to catch him but in vain. Master YUEN YUEN scolds YING NAM as she cannot fulfil her duty. He asks her to stay and not to interrupt SHEK SAN's journey to Tung Yeh Island.