In the late eighteenth century, a masked swordsman called Zorro protects Californian peasants from tyrannical landowners. Fifty years later, in Madrid, Spain, Don Diego Vega is in bed with his mistress when her husband and his brothers challenge Diego to a swordfight. As Diego fights, his mute servant Paco enters with a letter from Diego’s father asking his son to return home to Los Angeles, California. Diego knocks his opponents aside and leaps into a waiting carriage. Diego arrives home after a twenty year absence and discovers his childhood friend, Esteban, is acting alcalde, and married to Florinda, whom both men pursued as boys. Diego wonders why his father is no longer alcalde, and learns he was killed in an accident. The local landowners elect Esteban as permanent alcalde and during his inaugural speech, Esteban announces higher taxes on the overburdened citizens. Charlotte Taylor Wilson, a Bostonian activist, arrives to incite the citizens to rebel. Charlotte drops some flyers and as Diego retrieves them, he introduces himself as one of the greedy landowners, and notes that she is also rich. Charlotte denies it, but then admits she has a small inheritance and is utilizing it to do something important. She makes fun of Diego’s accent and insists she does not want to be a preening peacock like him. Later, Diego receives an invitation to attend Esteban’s masked ball, and also receives a large box that was to be delivered to Diego upon his father’s death. Inside, Diego finds Zorro’s sword, mask, cape and hat, and a note stating it is the destiny of Vega men to become Zorro in times of need, although his father was not certain which of his two sons would assume the role. Diego decides to wear the costume to the ball. En route to the party, he encounters a peasant who has been robbed. Diego catches the bandit and prevails in their swordfight. The bandit asks for mercy, which Zorro grants as long as the man spreads word that Zorro has arrived to protect the oppressed. As Zorro returns the grateful peasant’s money, he learns the bandit was actually Esteban’s tax collector. At the ball, Charlotte protests outside. Two soldiers accost her, but Diego invites her inside. She introduces herself and asks his name, but he refuses to answer. Florinda does not recognize Diego beneath his costume and flirts with the handsome stranger. Meanwhile, the tax collector informs Esteban about Zorro’s escapades. Esteban sees Zorro with Florinda and challenges him to a swordfight. As the two men fight throughout the ballroom, the peasants chant Zorro’s name. When Zorro knocks Esteban’s sword aside, the alcalde calls for his soldiers, but Zorro eludes them and swings to the second floor. However, he falls off the balcony, injures his foot and limps away. Later, Florinda sneaks into Diego’s bedroom and wonders why he did not come to her party. He claims he thought it was the next day. She wants to make love, but is forced to hide when her husband unexpectedly arrives. Esteban announces Zorro was at the ball and demands to know why Diego missed it. Diego insists he was ill, but Esteban is suspicious. Claiming Zorro looks similar to Diego, Esteban forces Diego to move around and prove his foot is not hurt. Diego hides his pain, and Esteban apologizes to his friend, then decides a reign of terror will prove no one can oppose him. Diego’s injury makes it impossible for him to stop Esteban’s cruelty, and he worries that his father would be disappointed. Three weeks later, his twin brother, Ramon, arrives, having also received a letter from their father. Twenty years ago, their father sent Ramon to the British Navy to make him more masculine, but his son grew into an effeminate Brit and changed his name to Bunny Wigglesworth. When Bunny learns of their father’s death and the Zorro legacy, Diego suggests that his brother play the part. Bunny agrees, but wants the world to recognize him as Zorro, the Gay Blade. He attempts a Spanish accent, but refuses to wear the black costume and prefers whips to swords. Later, the tax collector informs Esteban that he was robbed by Zorro, who wore a plum red outfit, used a whip and had a strange accent. Several landowners arrive with tales of being robbed by Zorro, and describe his colorful array of outfits. Esteban promises to capture Zorro, but the masked man eludes him. Bunny, acting as Zorro, brings a donation to Charlotte at the mission. She promises to do anything to help, and admits that she loves Zorro. Later, Diego is jealous to learn that Charlotte offered her love to his brother. Bunny hides when Esteban unexpectedly arrives with a sketch of Zorro, whom he calls a “swishbuckler.” Suspicious of the drawing’s resemblance to Diego, Esteban forces Diego to act like a “sissy,” then apologizes for suspecting his friend. Esteban spots a man outside wearing an orange cape and chases him. When they catch up with Bunny, now hidden beneath robes, Diego insists it is Brother Ramon, a priest. Esteban asks the padre to pray for him, and as Esteban’s eyes are closed, Bunny leaves on the alcalde’s horse. Furious, Esteban promises revenge. Florinda wants another masked ball to show off her extravagant new necklace and Esteban agrees, theorizing Zorro will not miss the opportunity to steal it. When Diego arrives at the ball dressed as Zorro, Esteban thinks he has caught his nemesis. However, Diego insists he received a letter from Esteban asking him to dress as Zorro. The other landowners arrive, also dressed as Zorro and claiming it was Esteban’s order. Bunny arrives in a dress and Diego introduces him as his cousin Margarita Wigglesworth. Esteban is enchanted and asks “Wiggy” to dance. Later, Margarita spills a drink on Florinda’s chest while admiring her necklace, then follows her into the powder room and steals the necklace while pretending to help the furious woman. Florinda frees herself from Margarita’s grasp and returns to the ballroom, where Esteban immediately notices the necklace is missing. Diego feigns surprise at his “cousin’s” deception. Later, Diego meets Bunny, who is in his naval uniform and setting sail again in two days. Diego’s foot has healed, so he can resume the role of Zorro, and Bunny insists his brother romance Charlotte. Diego dresses as Zorro and gives the necklace to Charlotte, then kisses her. She knows it is Diego behind the mask, although she admits she once thought there were two Zorros. As they declare their mutual love, soldiers approach. They part, not realizing they were seen by a peasant, who informs Esteban that Zorro gave the necklace to Charlotte. Esteban arrests Charlotte to lure Zorro to her execution. As she is tied to a stake, Esteban asks for a padre’s prayers and discovers it is Zorro, who offers to exchange his life for Charlotte’s. Zorro asks that his identity not be revealed in public, out of respect for his family, and Esteban agrees. As the soldiers tie Zorro to the post and prepare to shoot him, Zorro, the Gay Blade, in gold attire, appears on a turret. The crowd cheers as he swings down and frees the other Zorro. As the Zorros battle the soldiers, the peasants join in the fight. Soon, everyone unites and turns on Esteban. Afterward, Bunny rides toward his ship, and Diego and Charlotte decide to marry.