As Ryu and Ken near the end of their training they are impatient to master the power of 'Hado'. Their Master, Goken, worries about sharing this powerful technique. Goken sets Ryu and Ken on a quest to find Gotetsu's Dojo where he trained.

At Goutetsu's Dojo Gouken, Ryu and Ken pay homage at Goutetsu's grave. Ken and Ryu discover something secret in Gouken's past. Gouken recalls his own time spent training alongside his brother Gouki under their Master Goutetsu. Ryu and Ken fight!

In the past, Goutetsu instructs the young Gouken and Gouki. Gouki is drawn to the power of 'Satsui no Hado'. In the present, Ryu and Ken try to create their first Hadouken. Gouken is disturbed by Ken's approach and they argue. Ryu and Ken learn more about the history of Ansatsuken, their master Gouken and his dead brother Gouki.

Ryu is disturbed and sees a foreboding stranger in his nightmares. Ryu and Ken sneak out for adventure at the G.I. Bar. Ken's father makes a surprise visit. Ryu is unsettled by the old Dojo.

Gouken and Gouki vie for Sayaka's attention. Gouki uses 'Satsui no Hado' in a sparring match almost killing his opponent. Goutetsu gives Gouki an Ultimatum after his abuse of Satsui no Hado. Gouki and Sayaka part.

Ryu and Ken continue to work on their Hadouken, but Ryu is troubled and refuses to fully manifest his. Something is learnt of Ryu's past. A mysterious stranger appears to Gouken.