The battalions of warring states Liang and Wei collided in a bloodbath that lasted from dawn until dusk. Only two men were left standing - a foot soldier from Liang and the rival General from Wei. The Soldier survived because he is an expert in playing dead, with a device strapped on his body which protruded like an arrowhead for added realism.
The Soldier captured the wounded General, hoping to use the enemy as his ticket to freedom - by handing the General to the Liang warlord, the Soldier could be honorably discharged and return home to his peaceful life. The young General, though taken captive, was condescending towards the Soldier. The two men were often at loggerheads during the long and winding journey.
The film starts off with the original rhyme as told by Maleva (Chaplin). It then cuts to Ben Talbot, in the Blackmoor woods armed with a pistol. He is confronted by a werewolf which severely injures him. He flees towards a nearby mausoleum, with the creature in pursuit.
Traveling Shakespearean theatre actor Lawrence Talbot (del Toro) returns to his ancestral home to investigate the whereabouts of his recently missing brother upon request from Ben's fiancée Gwen Conliffe (Blunt). His distant and eccentric father Sir John Talbot (Hopkins) greets him and reveals that his brother Ben's body was already found in a ditch and surmises he will attend the funeral. Lawrence inquires about the body and goes to see it, where it is stored at the local mortuary: Ben's remains are thoroughly mangled and torn apart.
While investigating his brother's death, Lawrence heads to the nearby gypsy camp, to which Ben was the town's liaison. While there, an unnamed werewolf suddenly rampages through the camp, killing and maiming most of the gypsies. Lawrence gives chase, and is subsequently attacked by the werewolf and bitten on the neck, though the pursuing gypsies manage to scare it off. Lawrence is tended to and taken to his father.
Soon after, Inspector Francis Aberline (Weaving) of Scotland Yard arrives and questions Lawrence: both are suspicious of each other, and Aberline quickly departs. Lawrence wanders to a nearby lake and finds Gwen there, where they converse and seem to establish a flirtatious relationship. Soon after priests and the local village men arrive to take Lawrence away claiming he "bears the mark of the beast", but his father saves him, threatening to shoot them if they trespass at Talbot Hall again.
Many nights after on the full moon, the villagers arm themselves with guns packed with silver bullets and set a trap for the werewolf at the ruins of an old church, using a stag as bait. That night, Lawrence sees his father walking out to the crypt. He follows and finds a cell containing his father and a shrine to his deceased mother. Sir John then locks himself inside with Lawrence outside the door just as his son begins to transform into the Wolfman for the first time. Elsewhere, Aberline plans to spend the evening at the local tavern to wait for the suspect's attack. Lawrence, now fully changed alerts everyone to his presence by howling for the first time. He attacks and kills all of the villagers that set the trap, and Aberline stumbles upon the aftermath.
When he changes back the next day he is greeted by his father. He is arrested by the police and Aberline, and is taken to the mental institution his father sent him to as a child. He is relentlessly tortured by his sadistic doctors from his childhood, who claim his lycanthropy is simply a delusion: he also begins to suffer severe hallucinations involving the Wolfman and Gwen. He awakens in his cell sometime later, his father now with him. He explains that the institution had convinced him that his mother killed herself, but what he really saw was his father as a werewolf, who had killed his mother. Sir John then explains how he was bitten by a wolf-boy in a cave when he was hunting in the mountains of India, and how for the past 25 years, Singh, his Indian man-servant has locked him in the crypt, but one night in a jealous, drunken rage (as Sir John confessed that he had become attracted to and obsessed with Gwen) he incapacitated Singh and was therefore unable to lock himself in, resulting in Ben's death at his hands. It is also confirmed that it was Sir John who bit Lawrence. Lawrence vows to kill his father to avenge his mother's and brother's deaths and for cursing him, a threat Sir John dismisses.
Lawrence is taken into a court of scholars to dis-prove the idea of werewolves. As the full moon rises, he transforms and kills a number of the men in attendance (including the doctors who had tortured him), then rampages across London until dawn. He flees to Gwen's shop for safety: she takes him in and they admit their feelings to each other. Aberline orders his men to capture Lawrence, who is traveling back to Blackmoor to kill Sir John. Meanwhile, Gwen meets with Maleva where she tries to find a way to lift the curse.
Upon arriving home, Lawrence arms himself with silver bullets Singh kept (finding Singh's eviscerated and rotting corpse in the process) and confronts his father. He is unable to shoot, however; Sir John reveals that he removed the gunpowder from the bullets long ago. Both he and Lawrence transform and fight, setting the mansion on fire in the process. Sir John has the upper hand on Lawrence until he is kicked into the fireplace and subsequently beheaded. Aberline and Gwen then arrive on the scene; Aberline tries to shoot the still-standing Lawrence, but Gwen grabs his gun arm, allowing Lawrence to bite him and throw him aside. Gwen flees into the forest, only to be chased down by the Wolfman. Gwen is forced to shoot Lawrence with a silver bullet in reluctant self-defense. Before he dies he turns back into a human and spends his last moments with Gwen. The mob arrives with Aberline, who appears clutching the silver cane. Gwen's parting words are heard as Talbot Manor appears in flames and a wolf's howl is heard, presumably from Aberline.