When the magistrate Lord Li's stepdaughter is kidnapped by bandits, Monkey reluctantly takes on the job of catching them. He soon learns that the bandits are not what they seem, but their bark is far worse than their bite. Meanwhile, Tripitaka, Pigsy and Sandy spend the night at an inn that's owned by a wicked dog-woman. She has a big surprise in store for Tripitaka.

Tripitaka is visited in a dream by the restless spirit of the deceased king of the land of Cockcrow. He tells Tripitaka he was murdered by a Taoist magician and thrown into a well; for the past three years this magician has been impersonating him. With the help of the king's son, Tripitaka and his disciples set out to prove that the current king is a fake.

The Prime Minister of the Kingdom of Buddha's Law invites Tripitaka and his disciples to stay as his honoured guests. He tells them of the difficulty in controlling the black magicians, shape-changers and bandits who live in the nearby mountains. Tragedy strikes when Tripitaka becomes critically ill with Tibetan Fever. Meanwhile, Pigsy leads the guards in a search for the vampire responsible for a girl's murder. He makes a shocking discovery.

After getting separated from Pigsy and Sandy, Monkey and Tripitaka find a creepy house in the middle of nowhere. They are shown hospitality by Mr. Chin and his daughter Kohran who live there. After he befriends Kohran, Monkey discovers that there's more to her father than meets the eye. Meanwhile, Pigsy and Sandy are kidnapped by the man who murdered Mr. Chin's wife thirteen years earlier. He plans to abduct Kohran...

While Tripitaka and his disciples sleep, The Illiterate Vampire appears and plans to bite Tripitaka. The others wake, and chase him away. The next day, the pilgrims see a display of wanted posters - the king is rewarding people for killing monsters, 10 gold pieces per monster. Pigsy meets a blind girl selling flowers in the street, and becomes fond of her. To raise 100 gold pieces for an operation to cure her blindness, Pigsy goes into business as a monster-killer.

After losing their way, the pilgrims find themselves heading towards Mt. Blue Wolf, a place where hideous wolf demons swagger like peacocks. Their leader, Blue Wolf Demon, craves human flesh, and sets his sights on the tasty Tripitaka. While looking for food, Dragon falls off a cliff. He is rescued by a farmer called Ri Shishin, who turns out to be a wolf in sheep's clothing; Blue Wolf Demon makes him an offer he can't refuse to hunt down Tripitaka.