The film begins early in the century with our villain, apparently some sort of sorcerer or alchemist. His "satanic power" manifests itself rather arbitrarily throughout the movie in various ways. He is imprisoned and sentenced to death but places himself in a deathlike trance prior to his execution and is buried. Fifty years later a pair of grave diggers unearth his coffin and are understandably surprised when he pops up and kills them. The villain sets up shop in a cobwebby old house and begins his reign. He goes out to, hypnotize a young woman, bring her back to the house, then shut her in a room where she is incinerated by flames (off-screen). Enter Blue Demon. He gets involved when his ring assistant is killed by the sorcerer. The police investigate but find no clues. In the first of a seemingly endless number of puzzling sequences, Blue Demon decides to check things out for himself. Although the police have already investigated the crime scene in broad daylight and removed the body, Blue Demon goes back at night and looks around with a flashlight. He discovers absolutely nothing, and leaves. The sorcerer visits a sixties version of a Mexican Goth club, where kids rock out in a dingy bar decorated with corpses and skeletons. A young lady with an enormous bee-hive hairdo enthusiastically lip-syncs to a catchy, Lesley Gore-type pop song before being hypnotized, abducted, and incinerated. Blue Demon, meanwhile, has come across a mysterious old book which provides him with information about the sorcerer. He spends much time reading book. next thing, Blue Demon has his trusty flashlight and he is entering a spooky cave which contains a secret passage to the sorcerer's house. Blue Demon opens the secret passage in the cave wall, what we see inside is a tangle of what appear to be pine boughs. He pushes through them and disappears from view. The very next shot is inside the house, where Blue Demon enters via a secret door in the fireplace. Blue Demon pokes around the house and finds some of the kidnapped women's clothes. This seems to be significant to him.
Blue Demon is shown relaxing around his apartment.
The sorcerer has somehow figured out that Blue Demon is after him and now stands outside the apartment. Sorcerer hypnotizes the Wrestler and makes him jump from the top of a high wall. Blue Demon's athletic skills allow him to land unharmed, and the hypnotic spell is broken. The sorcerer flees. Finally, Blue Demon leads the police to the sorcerer's house, Blue Demon finds the sorcerer, and they battle.