The film serves as a loose sequel to Havoc in Heaven, and adapts later episodes in the 16th century Chinese novel Journey to the West.
As a punishment for rebelling against the heavens, Sun Wukong, the Monkey King, has been trapped under a mountain for 500 years, until he is helped by the monk Tang Sanzang.
The White Bone Demon, Baigujing, arrives and warns them that the Monkey King is the monk's disciple, and that he is a very powerful opponent.
Though this causes all the other demons to lose hope, Baigujing devises a scheme to subdue the Monkey King by disguising herself as an innocent beautiful woman.
When the Monkey King once again attacks this seemingly innocent person, Monk Tang defends the old man, allowing the demon to escape.
He tricks Baigujing into thinking he is her mother (the Nine-Tailed Vixen from the Golden and Silver Horned Kings adventure in the original novel) and manages to defeat her and free Monk Tang.