In 1824, Benito Juarez (Carlton Young), the president of the new Mexican republic, worries that vitally important gold shipments from the San Mendolito Mines will never reach Mexico City. The president's understandable fears are quelled, however, by local nobleman Don Francisco (Guy D'Ennery), who is organizing a "fighting legion" to protect the shipments and thus the safety of the six-months-old republic
Having cheated death in an avalanche, Don Diego (Reed Hadley), aka Zorro, manages to get the gold safely to Mexico City, where he is greeted by a grateful President Juarez Carleton Young). Back in San Mendolito, Manuel (John Merton), the commandant, publicly blames Zorro and not the Yaqui Indians for attacking the gold shipment.
In the third chapter of Zorro's Fighting Legion, our masked, whip-wielding hero (Reed Hadley) manages to save his friend Ramon (William Corson) just before the old mission explodes. Assigned to trail a couple of Don del Oro's henchmen, Zorro's servant Juan (Budd Buster) discovers a secret room in the Mendolito Mine, where Gonzales (Edmund Cobb) and his men are manufacturing the golden arrows used by Tarmac (Joe Molina) and his Yaquis to terrorize the area.
Having extricated himself from his latest peril, Zorro (Reed Hadley) discovers a gun left by one of Don del Oro's henchmen. Attempting to find the weapon's owner, he breaks into the Hernandez Armeria, where he is confronted with no less than three thugs. Once again, Zorro uses his wits and escapes.
Easily surviving the collapsing bridge, Zorro (Reed Hadley), who is still attempting to prevent the shipment of ammunition to Juarez (Carleton Young) from being hijacked by Don del Oro and his hirelings, lights the flaming "Z" to alert his Fighting Legion. In the meantime, Don del Oro's chief lieutenant, Moreno (James Pierce), sets a deadly trap for the wagon train carrying the ammo, which he hides in a cage
Having survived the exploding wagon, Zorro and his legion return the stolen ammunition to San Mendolito with the message that the masked avenger "always fulfills his promise." Questioning Volita (Sheila Darcy), council members Felipe (Leander de Cordova) and Manuel (John Merton) are told that Ramon (William Corson) and Don Diego (Reed Hadley) are tending to the latter's cattle.
Surviving Manuel's bullets, Zorro (Reed Hadley) manages to get away just as the runaway stage crashes into a ravine. With the assistance of Ramon (William Corson), Zorro brings the unconscious Manuel to the cabin of José (Jimmy Fawcett), one of the legionnaires. Dressed in Manuel's uniform and sporting a bandage that completely covers his features, Ramon is then deposited in the San Mendolito jail.
Saved by an air pocket inside the mountain, Zorro (Reed Hadley) and Ramon (William Corson) swim to safety. Outside, they quickly capture the fleeing Manuel (John Merton), who is finally ready to name Don del Oro's true identity. "I owe him nothing now," says Manuel, "Don del Oro is. . ." Just then one of Don del Oro's Yaqui fighters kills the commandant with the ubiquitous golden arrow.
The golden arrow hits a mirror instead of Don Diego (Reed Hadley), but the would-be Yaqui assassin seems to have disappeared into thin air. Both Diego and Ramon (William Corson) suspect that the Indian may be hiding inside a water wagon destined for the San Mendolito mine.
With the water wagon's secret compartment performing as a buoy, Zorro (Reed Hadley) survives the plunge into the river. Returning to Ramon's home, he learns that Kala (Paul Marion), a Yaqui prince, is to be tried for the theft of firearms that might have enabled the evil Don del Oro to reach his goal of becoming emperor of Mexico.
Believing that Zorro (Reed Hadley) has perished in an explosion, Don del Oro, the false Yaqui god, assigns the tribe to attack San Mendolito. In an aside to his henchmen, the villain reveals that he is a member of the San Mendolito council and that they must "send the government troops on a fool's errand."
