Selina D'Arcey (Elizabeth Hartman) is a blind girl living with her prostitute mother Rose-Ann (Shelley Winters) and grandfather Ole Pa (Wallace Ford), in a city apartment. She strings beads to supplement her family's small income, and spends most of her time doing chores. Her mother is abusive, and Ole Pa is an alcoholic. Selina has no friends, rarely leaves the apartment, and has never received an education.
Nick Parker (Rutger Hauer), an American soldier serving in the Vietnam War, is blinded by a mortar explosion, and soon after rescued by local villagers, who help him recover his health. Although he remains blind, as a part of his recovery, he is taught by the local master to be an expert swordsman, and to train his other senses.
The film's plot follows a traditional theme, with Zatoichi (a blind swordsman) coming to the defense of townspeople caught up in a local Yakuza gang war and being forced to pay excessive amounts of protection money. Meanwhile, Zatoichi befriends a local farmer and her gambler nephew and eventually offers his assistance to two geisha siblings (one of whom is actually a man) who are seeking revenge for the murder of their parents. The siblings are the only survivors of a robbery and massacre that was carried out on their family estate ten years ago. They soon discover the people responsible for the murders are the same Yakuza wreaking havoc on the small town.