Two snake spirits have been training for many centuries to take human form and experience the love, freedom and wisdom that is supposedly only available to humans. White Snake (Joey Wong) is the more experienced one and proceeds to get engaged with local scholar Hsui Xien (Wu Hsing-Kuo), with whom she plans to have a child who would complete her passage into the mortal realm. Green Snake (Maggie Cheung) is the younger and more impulsive of the two sisters and she is not yet quite sure about the benefits of the human world. The two snakes move into their magically created house and start a successful medical practice in the town.
Their enemies are a buffoonish Taoist and an overzealous Buddhist monk (Vincent Zhao) who make various attempts to banish them from the human world. The monk thinks of himself as a keeper of the natural order of the world and is very prejudiced against spiritual beings seeking to improve themselves. He brings things to a head when he abducts White's husband from the human/spirit mixed marriage into his religious reeducation camp–styled temple.