Years ago, a village head in the Hong Kong countryside executed a man for committing adultery by drowning him in the ocean. His mistress, in attempts to flee the village, dies when she plummets into a pool of quicksand. Years later, people swimming in the ocean mysteriously vanishes, and their bodies wash ashore days later. A local policeman named Lu Hsien who practices Taoist magic believes a water ghost (presumably the ghost of the adulterer) is responsible for their deaths. Therefore, he joins forces with his colleague, Wang Hsiao-Ming, to rid the countryside of this demon before he can strike again. However, Hsiao-Ming is unaware that the ghost of the mistress, having risen out of her muddy grave, fell in love with him and will see to it that no other person falls for him.
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