Plot
Retired detective Harry Kilmer is called upon by an old friend, George Tanner. Tanner has been doing business with a yakuza gangster, Tono, who has kidnapped Tanner's daughter Louise to apply pressure in a business deal involving the sale of guns. Tanner hopes that Kilmer can rescue the girl using his Japanese connections.
Kilmer and Tanner had been Marine MPs in Tokyo during the post-war occupation. Kilmer became aware of a woman, Eiko, who was involved in the black market to procure penicillin for her ailing daughter. Kilmer intervened on behalf of Eiko during a skirmish, saving her life. After some time living together, with Kilmer repeatedly asking Eiko to marry him, her brother Ken returned from an island where he was stranded as an Imperial Japanese soldier. Both outraged that she was living with his former enemy and deeply indebted to Kilmer for saving the lives of his (apparently) only remaining family, Ken disappeared into the yakuza criminal underground and refused to see or speak to his sister. Eiko, cautious not to do any moves to offend Ken further, broke off contact with Kilmer. Before returning to the US, Kilmer bought Eiko a bar (with money borrowed from George Tanner), which she still operates, named "Kilmer House" in his honor. Kilmer has never stopped loving her.
Ken's debt to Kilmer, giri, is a lifelong obligation that traditionally can never be repaid. Tanner believes that Ken would therefore do anything for Kilmer, including rescuing Louise. Traveling to Tokyo with Tanner's bodyguard, Dusty, they stay at the home of another old military buddy named Oliver Wheat. Kilmer visits Eiko at the bar's closing time, seeking to find Ken. Eiko's feelings for Kilmer are as strong as ever. He also becomes reacquainted with Eiko's daughter, Hanako, who is delighted to see Kilmer again. Eiko tells Kilmer that her brother can be found at his kendo school in Kyoto.
Kilmer travels by train to visit Ken at his kendo school. Ken is no longer a yakuza member, but will still help Kilmer. They find and free Louise. In so doing, Ken "takes up the sword" once again, attacking one of Tono's men to save Kilmer. This is an inexcusable intrusion by Ken in yakuza affairs. Contracts on both Ken's and Kilmer's lives are issued. Despite Tanner's protests, Kilmer insists on staying until the danger to Ken can be resolved. Eiko suggests he see Ken's brother Goro, a high-level legal counselor to the yakuza chiefs. Goro is unable to intercede due to his impartial role in yakuza society, but suggests Ken can remove the death threat by killing Tono with a sword. The only alternative is for Kilmer to kill Tono himself, by any means (as an outsider, he is not bound to use a sword). Because Kilmer is familiar to Goro as an unusual gaijin who understands and accepts Japanese values, he proposes that Kilmer now has an obligation to Ken.
After an attempt on Kilmer's life at a bathhouse, he learns that his old friend Tanner has taken out the contract on him. Tanner is secretly broke and owes Tono a huge debt. Dusty discloses that Tanner and Tono are business partners. During a violent attack on Ken and Kilmer in Oliver Wheat's house, Dusty is stabbed to death with a sword, and Hanako is shot and killed.
Seeking advice again from Ken's brother, Goro advises them that they have no choice but to assassinate Tanner and Tono. This will embarrass the partners in the eyes of the yakuza. Goro discloses that he has a "wayward son" who has joined Tono's clan and asks that Ken protect him should he be caught in the battle. In private, Goro then discloses the shocking family secret to Kilmer: Eiko is not Ken's sister, but his wife, and Hanako is their only child. Kilmer understands the true meaning of Eiko and Ken's rift, as well as Ken's anguish over the death of Hanako, all of which is brought about by his repeated intercessions in their lives.
Kilmer storms into Tanner's apartment and kills him, then joins Ken for a near-suicidal attack on Tono's residence. During a prolonged battle, after Ken traditionally kills Tono with a katana, Goro's son attacks them, and Ken kills him in self-defense. Bearing the news to his brother, Ken moves to commit seppuku, but his brother pleads with him not to bring more anguish to their family. Instead, Ken performs yubitsume (the ceremonial yakuza apology by cutting off one's little finger).
Before leaving Japan, Kilmer visits with Ken at home and asks to speak to him formally. While Ken prepares the tea, Kilmer quietly commits yubitsume, and when Ken enters the room, he waits for him to be seated. Sliding the folded handkerchief that contains his finger to Ken, he says, "Please accept this token of my apology" for "bringing great pain into your life, both in the past and in the present." Ken accepts, and Kilmer asks, "If you can forgive me, then you can forgive Eiko," adding, "You are greatly loved and respected by all your family." Ken professes that "no man has a greater friend than Kilmer-san," and Kilmer, overcome by emotion, says the same of Ken. Their obligations now apparently resolved, Ken takes Kilmer to the airport, and both men bow formally to each other before parting.
