In 1850 the people of California are voting to decide whether or not to join the United States as a state. During one of the votes, a wild gunman named Jacob McGivens, attempts to steal the box of votes. Before he makes off with the votes, however, Zorro appears and chases after him and his men. Zorro succeeds in recapturing the votes, but in their scuffle McGivens manages to pull off Zorro’s mask. A pair of Pinkerton agents see the face of Zorro, recognizing him as Don Alejandro de la Vega. Zorro then makes a make-shift mask out of his costume and rides off on his stallion, Toronado, to deliver the votes to the governor.
Upon returning to his mansion, Alejandro is greeted by his loving wife, Eléna. Eléna believes that Alejandro can now give up being Zorro, but Alejandro is sure that the people will still need him. Angered of Alejandro’s neglecting his wife and son while going out as Zorro, Eléna kicks him out of the house. The next day, after sending her now 10-year-old son, Joaquin to school, Eléna is confronted by the Pinkertons, who reveal that they know who Zorro really is. Soon after, Alejandro is served with divorce papers from Eléna.
Three months later, Alejandro is living in a hotel, depressed over the separation from Eléna and not having been summoned as Zorro in all this time. His friend and childhood guardian, Father Felipe, convinces him to attend a party at a French count’s new vineyard, and there Alejandro finds out that Eléna has been spending time with the count and her former schoolmate, Armand. Later, after drinking himself stupid, Alejandro witnesses a huge explosion go off close to Armand’s mansion and becomes suspicious of his ex-wife’s long-time friend.
Afterwards, McGivens and his men attack a peasant family, the Cortezes, with whom Alejandro is friends, in order to seize their land deed. Zorro succeeds in rescuing Guillermo’s wife and infant son, but McGivens shoots Guillermo just before disappearing with his gang, the deed to the Cortez home in hand. Zorro subsequently stakes McGivens out at Armand’s mansion to confirm his suspicions and finds out that Armand wanted Cortez’s land to build a railroad. At the same time, he encounters Eléna, who has been doing undercover espionage for the Pinkertons and discovered that Armand is to receive a mysterious shipment.
Zorro tracks McGivens to a cove where the count’s cargo is being delivered. However, on a class trip nearby Joaquin has also come across McGiven’s gang and hitched a ride. Zorro saves his son, who does not recognize him, from the bandits, but the only clues he is able to retrieve are a piece of the cargo – a bar of soap – and the name Orbis Unum from one of the crate lids. Felipe and Alejandro learn that Armand is the head of a secret society, the Knights of Aragon, which secretly ruled Europe in the past. Armand plans to throw the United States, which is perceived as a threat to the Knights’ power, into chaos before it can gain too much power to be kept in check.
Sometime later, Alejandro is captured by the two Pinkertons and is told that they black-mailed Eléna into divorcing him and getting close to Armand to find out his plans; since California isn’t yet a state, they couldn’t conduct a legal investigation. Joaquin stumbles upon his father’s whereabouts and frees him from prison. Zorro then heads over to Armand’s mansion, while Eléna also arrives there. After meeting up, they eavesdrop on Armand’s meeting and learn that the soap bars actually containglycerin – a precursor to nitroglycerin, which Armand plans to distribute throughout the Confederate Army, with the help of Confederate Colonel Beauregard, to destroy the Union. After confessing her involvement with the Pinkertons, Eléna then heads back to the mansion before Armand gets back, and Zorro prepares to destroy the train carrying the explosive shipment. Meanwhile, McGivens arrives at Felipe’s church to look for Zorro, but ends up shooting the priest and kidnapping Joaquin.
At the mansion, Armand is informed by his butler Ferroq about Eléna’s deception and, showing her the bodies of the Pinkerton agents, brutally confronts her with his knowledge. He takes her and Joaquin hostage and prepares to take her on the train, forcing Zorro to stop his own sabotage and getting himself captured. He is unmasked in front of his wife and son, much to Joaquin’s shock. Joaquin and Eléna are taken away by Armand, while McGivens is tasked with killing Alejandro; but unexpectedly, Felipe arrives and helps Alejandro overpower McGivens, who is killed when a drop of nitro lands on his head. Felipe then reveals that the crucifix around his neck shielded him from McGivens’ bullet, and Alejandro goes to save Eléna and Joaquin.
Zorro catches up with and lands – along with Toronado – inside the train, and engages Armand in a sword fight. Meanwhile, Eléna has Joaquin escape and then fights Ferroq in the nitro storage car, eventually stuffing a bottle of nitro into his trousers and pushing him off the train just as it approaches its rendezvous point with Colonel Beauregard, killing them in the resultant explosion. Joaquin, unwilling to be left behind, collects Toronado and rides after the train.
Further along the tracks, under the eyes of a huge crowd, the governor is signing the bill that will make California a state. As the train gets closer, Joaquin has Toronado hit a track switch, causing the train to pass around the governor’s car. Zorro and Armand’s duel takes them to the very front of the locomotive; however, the track is a dead end blocked by a large pile of rails. Zorro hooks Armand to the train and escapes with Eléna. The train plows Armand into the block, killing him and causing the nitroglycerin to detonate, destroying the train. With Zorro as an official witness, the governor later signs the bill, and California becomes the 31st state of the United States of America.
Later, Felipe gets Alejandro and Eléna remarried with Joaquin as the only witness. Alejandro apologizes to his son for not telling him the truth, and he admits that Zorro’s identity is a family secret rather than just his own. Eléna then allows Alejandro to continue being Zorro, accepting that it is who he is, and Zorro rides off on Toronado to his next mission.