Zatoichi's travels have finally brought him back to the village where he was trained in the arts of the masseur, nearly ten years ago by his old sensei, Master Hikonoichi.
His proximity to his former teacher compels him to pay a visit, only to learn that Hikonoichi was recently killed while traveling, and his daughter Sayo has been sold into prostitution to repay the money lent to her father by local business man Tatsugoro.
Zatoichi sets out to free Sayo, only to discover that the entire village is suffering—victims of a scheme that has either forced their daughters into prostitution, or into doing the bidding of Tatsugoro, who is working for the corrupt Intendant, Isoda.
While intentionally baiting Hikonoichi's killer by jingling the toggle, Ichi befriends the local Dice Dealer Denroku (the Weasel) and his daughter, Tsuru.
Tatsugoro's men try to balk on paying, but Zatoichi easily overpowers them and takes his winnings from their chest, then tosses a single Ryō coin to the dealer—a "tip", to shame him—and leaves.
Denroku apologizes, explaining that he was instructed to switch the dice, though Zatoichi reveals that he bears him no ill-will, remarking on his own past dealings with Yakuza.
Tatsugoro uses the losses at the dice hall to extort Denroku—demanding that he steal Zatoichi's sword, or hand Tsuru over to him, to be used in the brothel (unaware that she overheard them).
Isoda instructs Tatsugoro to rally their men in order to launch a mass attack on Zatoichi, further declaring that they'll frame him for the murder of Odate.