The Pueblo is duped by a bogus tax collector who it turns out is a cunning con-articed known as ""El Conejo"" (The Rabbit). He steals Don ALejandro's prize racehorse in order to make his escape. Don Alejandro, the Alcalde and Zorro all go (separately) in pursuit of the villain who proves to be almost too cunning for even Zorro.
A special emmisary from the King, Gilberto Ricendo, arrives in Los Angeles and the first thing he does is arrest the Alcalde for treason. He brings with him a troop of Royal Cavalry, sentences the Alcalde to death and imposes martial law while he collects a special war tax. When Zorro spoils his plans Ricendo decides on a new plan. Either the Alcalde and Mendoza catch Zorro or they both die instead. Ricendo's real purpose in Los Angeles, however, is nothing to do with collecting taxes. He is out to destroy the De La Vegas.
Determined to get his taxes quickly, Ricendo confiscates church property. He makes it clear that he does this because wealthy land owners, like De la Vega, are exempt from paying taxes. The people insist that the De la Vega hacienda is given to Ricendo instead of the church. To add insult to injury, Ricendo impounds the De la Vega bank accounts so they cannot even buy their own lands back. While Don Diego goes to Santa Barbera to consult a lawyer, Zorro decides to teach Ricendo a lesson. But the Alcalde and Mendoza are waiting to catch Zorro as well.
The Alcalde blames Zorro for Hidalgo's death and tries to use Victoria to bait a trap. When Zorro goes after Victoria, Toranado is taken captive. Ricendo tries to put a rift between Don Alejandro and his son by using forged letters, but Alejandro isn't fooled. When Zorro attempts to rescue Toranado all does not go smoothly and he ends up injured while Ricendo falls from the rooftops. While the Pueblo celebrates Ricendo's death, his mother arrives in Los Angeles to see the final distruction of the De la Vegas. She is determined that the De La Vegas must die.
Inez Ricendo lied to her adopted son, leading him to believe that his true father, Alejandro De la Vega, rejected him in favour of Diego. The Alcalde and Mendoza are horrified to discover that Ricendo is alive and that their death sentence still stands. Ricendo allows them to wander free on their last day of life promising that if either of them tries to escape the other will die the most painful death he can invent. Ricendo sets a trap for Zorro, burying him alove in a rockfall. Then he goes to the Hacienda De La Vega to reveal himself to ALejandro as his first born son, convinced that he has been wronged by his father and determined to kill him.