As a young boy, Ethan Kendrick (Cody Arens) encounters in a shop, owned and operated by antiques dealer Jack (Robert Forster), a mysterious reptilian scale that shines with a blue light. This light projects itself upon Ethan. Seeing this, Jack pretends to suffer a heart attack and sends Ethan's father, who is selling him an antique dagger, to get help. Ethan then listens as Jack narrates a story (largely shown in flashback) explaining the scale.
Jack, having told this story, reveals that he is himself Bochun, and that Ethan is Haram, reborn to protect the Yuh-Yi-Joo from Buraki, an evil cobra monster bent on becoming a dragon, who is soon to return. Jack gives Ethan a medallion formerly belonging to Haram and reveals that the Yuh-Yi-Joo is a girl named Sarah whom Ethan will find in Los Angeles. Ethan accepts the medallion and the responsibility of caring for the Yuh-Yi-Joo.
Fifteen years later, Ethan has become a television news reporter, in which role he discovers that Buraki has returned. He then inquires into the news office's database for the location of a Los Angeles-based girl named Sarah, who is either nineteen or twenty years old and bears a dragon-shaped mark on her shoulder. His friend Bruce, despite his disbelief, helps Ethan search.
The Sarah that Ethan wants, one Sarah Daniels (Amanda Brooks), sees Ethan's news report and is terrified by the tracks Buraki has left. She hurries home and surrounds herself with protective symbols, which she does not understand but which she feels are the only tools she has by which to protect herself. Her friend Brandy, concerned but not quite understanding Sarah's problem, takes her to a tavern for a drink, hoping to distract her from fear. Sarah, still afraid, leaves the tavern and is attacked outside by three thugs, who are driven away by Jack. Word of her escape later reaches Ethan through another reporter. Buraki and his army continue to search for Sarah, attracting the attention of the U.S. Government and the notice of at least one civilian.
Ethan eventually finds Sarah at a hospital. Although the hospital's receptionist refuses him entry, a doctor later revealed to be Jack in disguise allows him into Sarah's room. Ethan is about to explain the truth of their situation to Sarah when Buraki attacks the hospital, intent on capturing her. Ethan and Sarah flee in a car driven by Bruce, with Buraki in pursuit. They are stopped by a commander of the Atrox Army, but eventually escape him due to another intervention by a disguised Jack.
Ethan subsequently explains the story to Sarah, who accepts it as true and Ethan as her protector. He then takes her to a practitioner of hypnotherapy, who helps her revive the memories of her previous life as the unsuccessful Yuh-Yi-Joo. The energy released by her body during the hypnotherapy session attracts Buraki, who destroys the hypnotherapist's house and follows Sarah and Ethan.
In a car, Ethan and Sarah flee to a more densely-populated area of the city, where they meet with Bruce in a restaurant. When Bruce has left Ethan alone, Jack warns Ethan that the Yuh-Yi-Joo must fulfill her destiny. Ethan, defiant as a result of his new attachment to Sarah, demands autonomy.
Moments later, Buraki finds Ethan and Sarah again. They attempt to escape him, resulting in a chase scene that culminates atop the U.S. Bank Tower. There, Buraki is distracted by several military helicopters, who proceed to attack him. Buraki then summons the Atrox Army to help him. This legion enters the city and advances through the streets, engaging the United States Army and the Los Angeles Police Department in battle. Here, the Atrox Army is shown to consist of black-armored, humanoid warriors; theropod-like cavalry called "Shaconnes"; small, winged Western dragons called "Bulcos"; and huge, slow-moving reptiles identified in the dialogue as "Dawdlers", who carry powerful rocket launchers on their backs. The Atrox Army proceeds, overwhelming the outnumbered Army forces. Ethan and Sarah are taken to an empty garage by two FBI Agents. The senior agent reveals that he has researched the legend of the Imoogi, and attempts to kill Sarah so that Buraki and his army would depart for another five centuries. The junior agent then kills his partner and gives the fugitives his car whereby to escape.
Ethan and Sarah then enter the rural countryside in the car. Sarah, having given up hope of escape, remarks that wherever she goes, the Imoogi will find her. Ethan, who seems bent on saving her both from Buraki and from the Good Imoogi for whom she is destined, refuses to admit this. Sarah pauses, then tells him that she is now twenty years old, revealing herself to have come into her full power as Yuh-Yi-Joo. Immediately, the Bulcos knock the car over and capture Sarah.
When Ethan regains consciousness, he finds himself tied to a pillar which stands before a menacing fortress in the midst of a darkened desert landscape. In front of it lies an altar from which Sarah is to be sacrificed to Buraki. Buraki is about to consume Sarah when Ethan's pendant unleashes a light that destroys all of Buraki's legions, though not the Atrox Leader or Buraki himself.
Ethan attempts to retrieve Sarah, but is halted by the Atrox Leader, with whom he engages in combat. The Atrox Leader is killed by Ethan's pendant when he inadvertently strikes it with his sword. A revived Buraki knocks Ethan down and attempts to eat Sarah, but is unexpectedly attacked by the Good Imoogi. Ethan and Sarah then watch as Buraki and the Good Imoogi battle. Ultimately, Buraki wins. He then approaches Sarah, who offers herself to him. Just as Buraki is about to absorb Sarah's power, she redirects it into the open mouth of the Good Imoogi, who is instantly revived and continues to fight Buraki, transforming as he does into a gigantic Korean dragon. The two struggle for a few moments until the Good Imoogi, now the Celestial Dragon, disengages from Buraki, flies to the top of the latter's fortress, and burns him to ashes by firing a fireball down his throat.
Having slain Buraki, the Celestial Dragon approaches Ethan, allowing Sarah's spirit to speak with him. Sarah, now a fully fledged Yuh-Yi-Joo, requests Ethan not to be sad, adding that she will love him for all eternity. The Celestial Dragon then takes Sarah back into his body and ascends to the heavens. Jack appears behind Ethan, reminds him that the two of them "have been given a great honor", and dissolves into dust. Ethan, recognizing that he will never see Jack again, whispers "Good-bye, old man", leaving Ethan walking back home.