The plot of the movie loosely follows the first two volumes of the trilogy.
Arn Magnusson is part of the powerful Folkung dynasty in the mid 12th century. He grows up in a monastery belonging to the Cistercians. He is trained in archery, swordsmanship and horsemanship by a former Knight Templar who resides in the monastery. When Arn leaves the monastery and returns to his family, he is soon pulled into the struggle between the powerful families, all fighting for the crown of the young nation that is to become the Kingdom of Sweden. He helps his friend Knut Eriksson to kill the old king Karl Sverkersson. This leads to war between the two factions. However Arn and his fiancée Cecilia Algotsdotter have pre-marital relations and for political reasons they are excommunicated and are forced to undertake twenty years of penance. Cecilia Algotsdotter in a convent and Arn as a Knight Templar in the Holy Land to fight against the Saracens.
While pursuing a band of thieves, Arn comes across the very enemy of all Christendom, Saladin, and saves his life. As Saladin later marches upon Jerusalem. Arn is given the order to march with all his knights, and they successfully ambush Saladin's army in a mountain pass (the ambush taking the place of the historical Battle of Montgisard figuring in the novel). Arn gains the right to return to his home country, but is forbidden by one of the crusades masters to do so. He finds himself engaged in a new campaign with the crusaders. They are violently defeated by Saladin and his men, where Arn is injured but survives. At Saladin's request, he is brought in Damascus where he is healed by Saladin's people. He leaves Damascus for his home country where he meets Cecilia and his son Magnuss; together they start a new life. The movie ends on Arn's death after he returns from a campaign where he led the Bjelbo royal house to victory against a rival kingdom. He dies in Cecilia's arms holding a Christian cross in his left hand.