The Heavenly Sword and Dragon Sabre takes place during 14th Century China during the Mongolian Yuan Dynasty, roughly 100 years after the events of Return of the Condor Heroes. After decades of struggles, famine, and bitterness which the Chinese citizens blamed on the Yuan Dynasty's misgovernment, the Martial Arts sects have begun to rebel. Prince Ruyang asks Cheng Kun, a Shaolin monk with an ulterior motive, for a plan on how to deal with the rebels. "The wielder of Heavenly Sword and/or Dragon Sabre rules the world." This well known legend in the Martial Arts community is the impetus for the tale of Zhang Wuji. The story begins with how his parents met, then tells his trials as an adolescent, proceeds to relate his rise to prominence and reveals the secret behind Heavenly Sword and Dragon Sabre and ends with the confluence of Wuji's love life, the Martial Arts sects' long standing grudges, and cruel fate..
元朝末年,武當弟子張翠山與天鷹教教主之女殷素素因捲入到屠龍刀的爭奪之中,與金毛獅王謝遜一起漂流到海上荒島。張與殷二人結合生子,取名無忌。十年後,張翠山與妻子回歸中土,卻因與屠龍刀的瓜葛,雙雙被逼自刎,只留下孤兒張無忌。
機緣巧合,張無忌練成了絕世武功,並救明教於危亡,被推舉為教主。元郡主趙敏在與明教交鋒的幾個回合後,戀上張無忌,並為了他最終放棄郡主之名,與父兄決裂。除了趙敏之外,張無忌與峨嵋派周芷若、表妹殷離和波斯聖女小昭也都有千絲萬縷的愛意。
周芷若首先知道了倚天劍和屠龍刀的秘密:刀劍之中所藏的,乃是武功秘籍的地圖。她盜取刀劍、殺死殷離,嫁禍趙敏。張無忌不明真相,心中痛恨。趙敏無力辯駁,只能眼睜睜看著張無忌與周芷若成親。
然而,有關謝遜的消息中斷了張無忌與周芷若的婚禮。張無忌終於確定趙敏才是他一生的摯愛。深悟武林真諦的張無忌在解了元軍對少林寺的圍困後,辭去教主之位,與趙敏歸隱山林。