In 1821, the Mexican Army is on the verge of liberating its country from Spanish colonial rule. In the area of Las Californias the cruel and ruthless Spanish Governor, Don Rafael Montero, is about to be overthrown. In a last ditch effort to trap his arch-nemesis, the masked swordsman Zorro (Anthony Hopkins), Montero prepares to execute three innocent townspeople. With assistance from two orphan brothers, Joaquin and Alejandro Murrieta, Zorro releases the prisoners. Zorro rewards the Murrieta brothers with a special medallion he wears, and escapes on his horse, Toronado, after cutting a "Z" into Montero's neck as a parting gift and warning.
The same night, however, Montero confronts Zorro at his home, having deduced that Zorro is really Don Diego de la Vega, a Spanish nobleman married to Esperanza, the woman Montero had always loved. Attempting to arrest Diego, a fight ensues, during which Esperanza is killed while trying to protect Diego. Diego's house is burned and his infant daughter, Elena, is taken to Spain by Montero to be raised as his own while Diego is taken to prison.