The Hong Kong super-cop must stop a group of blackmailing bombers at the same time that the villains of the first Police Story are out for revenge.
Dragon is now transferred to be the police head of Sai Wan district, and has to contend with a gangster kingpin, anti-Manchu revolutionaries, some runaway pirates, Manchu Loyalists and a corrupt police superintendent.
Three lazybones friends manufacture a firebomb and place it in a cinema. Pearl, a sadistic young girl, has observed the scene, follows the bombers and starts to manipulate them. The four criminals plan more and more daring acts.