After five years in Spain, Diego de la Vega sails home to his beloved California. Everything has changed. The citizens of Los Angeles are now under the thumb of the cruel Captain Monasterio. But Zorro, the mysterious masked avenger shows up.

Diego rides out to the Chumash tribe to visit his grandmother, Tainah, only to find Captain Monasterio and his soldiers in the village rounding up all the men to take them to a mountain labor camp where they will break stones.

Monasterio sets a trap for Zorro. As bait, he arrests innocent Indians. Next, he pretends to ride out of Los Angeles with his troops, leaving behind only Sergeant Garcia and a few men.

Diego's father is determined that his son will marry the lovely Carmen, the daughter of his best friend, Don Luis de Villalonga, a fellow ranchero.

Captain Monasterio has brought two cannons from Monterey to force the Chumash out of their village and, thus, take their lands.

To be rid of Zorro once and for all, Captain Monasterio hires Don Ramirez, an expert swordsman. A fencing contest will be held in Los Angeles.