Writer-director Yoji Yamada captured world attention with his 2002 film, The Twilight Samurai. The film scored big at the Japanese Academy Awards (winning 13 of the 15 for which it was nominated) as well as garnering much praise on the international festival circuit. His follow-up film, The Hidden Blade, accumulated a similarly impressive twelve Japanese Academy Award nominations, but won only one. The Hidden Blade, like its predecessor, is based on a series of novels by Shuuhei Fujisawa set in the late Nineteenth Century, as modernization and a resurgent imperial throne signaled the imminent end of the samurai era.

In 1860s Japan, the times they are a changin'. Samurai warlords look to European technology and military tactics to improve the combat abilities of their forces. The rank-and-file samurai are being trained in Western methods so that they in turn may train and command units in the new, modern Japanese military.

One of the samurai caught in the transition is Munezo Katagiri (Masatoshi Nagase, Suicide Club). His friend Yaichiro Hazama (Yukiyoshi Ozawa, Fireflies: River of Light) has already been dispatched to far-off Edo. Munezo spends his days training in the modern style, along with the rest of his clan's samurai retainers, many of whom scoff at the new ways as silly and unnecessary. Their instructor, sent all the way from Edo, is a picture of the new Japan: under his traditional robes he wears a starched, white, European-style shirt with high collar and necktie. The instructor can't understand why these backwater bumpkin samurai can't seem to grasp simple tasks like marching or running in formation, or loading and firing a cannon.

Munezo also finds time to pursue an old flame: the lovely Kie (Takako Matsu, The Wow-Choten Hotel, April Story). Prior to her marriage, Kie used to work as a servant girl in the Katagiri household. When Munezo finds that her husband's family is working, starving, and neglecting her almost to death, he simply walks into her in-laws' business and carries her out bodily, demanding that she be given a statement of divorce. A tentative romance buds between the two, prevented from blossoming fully by their difference in social status. He may be low-ranking, but he is a samurai, after all, and she is just a commoner.

In the meantime, old friend Yaichiro Hazama has managed to get himself embroiled in a political scandal in Edo and comes home to be placed in a cage, locked in solitary confinement. When he escapes, the clan bosses choose Munezo to hunt him down. They trained together under the same legendary kendo master and are reputed to be the two best swordsmen in the entire clan. Munezo cannot refuse the assignment; doing so would brand him a rebel and subject him to the same fate as Hazama. Munezo dutifully goes off to face Hazama, despite the blatantly dishonorable conduct of his superiors. He doubts his ability to best Hazama in a swordfight, but arms himself with a secret technique taught to him by his old instructor, Kansai Toda (Min Tanaka, The Twilight Samurai).