A group of bandits led by El Cuchillo arrives in Los Angeles, and set their sights on a silver shipment Garcia has been assigned to protect. When Zorro foils their plan, El Cuchillo vows to get even, and plans next to steal a cache of valuable hides.
A young lady, Constancia known to Zorro arrives in town. A young man, Miguel also arrives and meets her. Constancia tells Zorro they are no more than friends. He becomes suspicious at some of the evasive answers the boy gives about his past. Zorro realizes she intends to elope with Miguel. Realizing Constancia has a rather substantial dowry, he goes about delaying the elopement till he can confirm Miguel's true intentions.
Ramon Castillo arrives in Los Angeles to discover the pay wagon for the army carrying 5000 pesos is due. Ramon has unfinished business with Zorro after he was beaten for the Royal trophy back in Spain. Zorro foils the robbery, but in doing so gives his identity away through his sword technique. Ramon decides he is going destroy his old rival and reveal Zorro to the world. Zorro has other ideas and hatches his own scheme to outsmart Ramon