Basically a retread of the first movie, in which the evil Tree Spirit is back with yet another ghost played by Joey Wong. The Swordsman Yen and Leslie Cheung characters are replaced by a Buddhist Abbot and disciple (Tony Leung). Jacky Cheung also pops up again, this time as a money-grabbing swordsman with a neat bag of tricks.
Having slept for a century, the monstrous Tree Devil is now awaken and starts finding lost souls again. One stormy night, a wise High Priest and his student Fong pass by the Orchid Temple and realize that it is haunted. Fong encounters two evil spirits, the seductive Lotus and her hated sister Butterfly in the temple. Although Fong knows his master wants to capture them, he finds himself being attracted by them so he sets them free. The monks stay at the temple has to be prolonged since Fong carelessly loses the valuable Gold Buddha. Later on, they come to a corrupt local town, while the High Priest meets Yin by chance and a series of misunderstandings evolve. Meanwhile, Fong encounters Lotus again and finds himself falling in love with her.