Zorro, the masked deliverer of Indians of Spanish-ruled California, is about to be hanged when General Palma is declared governor of Santa Cruz. Palma is to replace the tyrannical commandante, Sebastian Golle, who has been pilfering King Charles' tax money and terrorizing the natives. With the help of the Indians, Zorro escapes and, posing as Don Diego Vega, a gentleman pauper from Mexico, offers his services to Palma and his lovely daughter Isabella. Palma, however, refuses Diego and unwittingly sends him out as bait for Zorro. But as Palma chases the elusive hero, he is killed by a bandit who leaves Zorro's "Z" mark on his dead body. After Isabella is made governor, Golle plans to marry her and receive Santa Cruz as her dowery, and Diego agrees to do his wooing for him. Golle, meanwhile, has been taxing the Indians beyond their means and enslaving the sons of those who cannot pay. When Golle's soldiers herd the slaves into the public square, their mothers cry for Zorro to deliver them. Hoping to expose Golle's barbarism, Diego brings Isabella to the square, where she promises to free the slaves once information on Zorro's whereabouts is brought to her and offers a public bounty of two hundred pieces of gold for the outlaw. Zorro, however, steals the gold and buys the slaves' freedom himself. Then, on Isabella's birthday, Golle stages a burlesque bullfight in which a child is placed in the ring, hoping to lure Zorro out of hiding. When Isabella pleads with the foppish Diego to save the child, he fights the bull bravely and adeptly, revealing his true virility and love for Isabella. Seeing them kiss, Golle accuses Diego of betraying him, and Diego fends off Golle and his soldiers and escapes. When Zorro's mark is found on Golle's wounded body, Isabella finally realizes Diego is Zorro and escapes from Golle's clutches to capture him, still determined to avenge her father's murder. Golle captures them both, however, and fatally whips Isabella's female companion, planning to blame her death on Zorro. When Zorro finds the woman marred with the same backwards "Z" found on Palma, Isabella finally realizes it was Golle who killed her father. Just as Zorro is about to be hanged, the natives stage an uprising and help him defeat Golle. Zorro's loyal priest then blesses Isabella and Zorro, and the couple falls through the gallows box and kisses.