Ding-on is an orphaned blacksmith working in Sharp Foundry, which is run by his master, a friend of his deceased father. The master's daughter, Ling, who narrates the movie, is romantically attracted to both Ding-on and his colleague, Iron Head. One day, Ding-on and Iron Head see a monk fending off a group of thugs, who later ambush and kill him in revenge. Iron Head is so furious that he identifies himself as someone from Sharp Foundry and taunts the thugs to fight him. The master is angry when he hears of Iron Head's reckless behaviour so he punishes him. Iron Head holds a grudge against Ding-on for telling their master about the incident. He becomes even more unhappy when their master announces his decision to make Ding-on his successor. That night, Ding-on overhears a conversation between Ling and her grandmother, and learns that his father died while saving Ling's father from Flying Dragon, a notorious heavily-tattooed assassin. Ding-on desires to seek revenge so he takes his father's weapon, a broken sword, and bids his master farewell. Ling tries to catch up with him but runs into trouble with the thugs. Ding-on hears Ling's screams for help and returns to save her. He fights with the thugs but loses his right arm and falls off a cliff. Ding-on is saved and nursed back to health by a peasant called Blackie. Seeing that he is now crippled, Ding-on abandons his quest for vengeance, buries his father's sword, and tries to lead a normal life with Blackie. At the same time, Ling and Iron Head venture out in search of Ding-on, whom they believe to be still alive. During this period of time, Ling gradually becomes more disillusioned with life and people, especially after she witnesses Iron Head taking advantage of a prostitute whom he saved earlier. Meanwhile, Ding-on endures humiliation while working in a restaurant. One day, he sees Flying Dragon and feels very frustrated because he can no longer take revenge. One night, a gang of bandits burn down his house, tie him upside-down, and beat him mercilessly. Later, Blackie finds a martial arts manual hidden by her parents and passes it to Ding-on. Ding-on becomes excited and tries to learn the techniques in the book, but cannot afford a good weapon so he uses his father's broken sword. Owing to his handicap and the book's incompleteness, Ding-on's efforts turn out to be futile initially. However, when driven to rage by his frustration, he suddenly makes a breakthrough and develops a devastating spinning movement which allows him to compensate for his lack of an arm and his broken weapon. Ding-on kills the bandits who burnt down his house and saves Ling from danger but does not reveal himself to her. At the same time, an evil man called Skeleton recruits Flying Dragon to help him destroy Sharp Foundry and kill everyone there. A battle breaks out between Flying Dragon and Sharp Foundry's blacksmiths. While his master is struggling to defend himself, Ding-on returns in the nick of time to save his master, and he kills Flying Dragon after a long fight. Skeleton and his men flee after seeing that Flying Dragon is dead. Ding-on then turns his back on Sharp Foundry and leaves with Blackie. In the final scene, an aged Ling imagines herself embracing Ding-on and returning to the happier times in the past.
In 2014, Time Out polled several film critics, directors, actors and stunt actors to list their top action films, and The Blade was ranked 43rd on the list.
