Jack and Wang follow and in the back alleys of Chinatown they get caught in a gang battle when the Wing Kong interrupt a funeral procession the Chang Sing are having for their recently assassinated leader. Truck driver Jack Burton (Kurt Russell) and his friend Wang Chi (Dennis Dun) go to the San Francisco International Airport to pick up Wang's fiancee Miao Yin (Suzee Pai).
While at the airport, a Chinese street gang (called the Lords of Death) kidnap Miao Yin and take her into Chinatown intent on selling her as a sex slave. During the street battle, powerful magicians in league with the Wing Kong, called "The Three Storms" (Thunder, Rain, and Lightning) use their supernatural powers to slaughter the Chang Sing.
Trying to escape Jack runs over the Wing Kong's leader, the sorcerer Lo Pan (James Hong). However, Lo Pan is not harmed by this and Wang has to help Jack after he is temporarily blinded by Lo Pan's glowing eyes.
Jack's truck is then stolen by the Lords of Death.
Wang takes Jack to his restaurant 'The Dragon of the Black Pool', where they meet up with lawyer Gracie Law (Kim Cattrall), Wang's friend Eddie Lee (Donald Li) and Egg Shen (Victor Wong), a magician and local authority on Lo Pan who moonlights as a tour bus driver in Chinatown.
They come up with a plan to infiltrate the brothel where they think Miao Yin is being held.
Once inside Jack (in disguise), starts to question one of the girls, but is interrupted when the Storms crash in and make off with Miao Yin.
Back in Gracie's apartment, they find that Miao Yin was taken to a place called The Wing Kong Exchange, a front for Lo Pan's domain.
With Wang's assistance, Jack infiltrates the place and the two get caught in a lift that fills with water.
After making their way out, Wang claims they're in "The hell of the upside-down sinners," and they are taken to a cell by Rain, who grabs Wang by the neck, and sends rubber balls to Jack's stomach with force.
Afterwards, they are taken in wheelchairs to see Lo Pan (now in the form of a crippled old man), where he claims that Miao Yin is "Safer with me than any creature on this Earth", after telling them of his intent.
Lo Pan catches Gracie, Eddie, and Gracie's journalist friend Margo entering the building on his security monitor, and sends Thunder to deal with them.
Wang and Jack are taken back to their cell, still in the wheelchairs, when Wang tells Jack about the 2,000 year old legend of Lo Pan; that he was cursed to roam the Earth in a ghost-like form until he can marry a special kind of girl.
They break free from the wheelchairs, but hearing Thunder return, they get back into the wheelchairs and put their blindfolds back on.