Enraged by Jo Gwan Woong's atrocities, Kang Chi's eyes turn red, and he lunges at him. Jo Gwan Woong frames Park Mu Sol for high treason and Kang Chi for murder.
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Kang Chi is asked by Tae Seo to rescue Chung Jo. He worries about how Chung Jo will react to his half-beast nature. Yeo Wool comforts him, saying he is still Choi Kang Chi, regardless of his appearance. Meanwhile, the Hundred Year Inn staff hear that Chung Jo is to spend the night with Jo Gwan Woong.
Kang Chi and Yeo Wool are trapped in the room where the silver chest is hidden. Seo-bwagwan grows suspicious of the wall hidden behind a scroll. Meanwhile, seeing Yeo Wool's scar, Kang Chi remembers his childhood encounter with her.
Dam Pyung Joon accepts Kang Chi and Tae Seo into the Mu Hyung Do Gwan (martial arts school), and Kang Chi strives to become a formal disciple. Jo Gwan Woong, suspicious of the Hundred Year Inn's asset list, searches for a secret vault. Meanwhile, Yi Sun Shin and Dam Pyung Joon plot to retrieve 5,000 nyang of silver without Gwan Woong's knowledge.
Jo Gwan Woong, having framed Kang Chi for murder, orders his execution. At that moment, Yi Sun Shin appears, demands Kang Chi's release, and declares the punishment unjust.
Yeo Wool is deeply shocked to see Kang Chi transform into a half-human, half-beast before her eyes and reports it to Dam Pyung Joon. Kang Chi, unable to accept his hidden beastly nature, is tormented.
Enraged by Jo Gwan Woong's atrocities, Kang Chi's eyes turn red, and he lunges at him. Jo Gwan Woong frames Park Mu Sol for high treason and Kang Chi for murder.
As the awakened Imoogi (serpent) coils up the pagoda, Sadam is ecstatic, claiming the dragon god is ascending. Jo Sang Heon and Moo Seok move to save Do Ha, while Lee Rin resolves to destroy the Imoogi.
Lee Rin confronts Park Soo Jong, who holds the royal seal. As soldiers attack Lee Rin, Sadam appears, threatening to kill the Queen Dowager unless Lee Rin hands over the seal.
Park Soo Jong threatens the Queen Dowager for the royal seal, warning of a bloodbath. Meanwhile, Lee Rin discovers the seal's location using a jade ring given to him by the Queen Dowager.
Park Soo Jong orders Lee Rin to be bound. As he's dragged away, Lee Rin shouts that the rebellion is reckless. The Queen Dowager warns Park that he will never get the royal seal if he harms Prince Wolgang (Lee Rin).
Park Soo Jong leads his troops to the palace, declaring he will take over as regent to fix the state's affairs. Meanwhile, Sadam is enraged to find that Do Ha, who was trapped inside a painting, has disappeared.
Kisan is shocked to hear ghosts are killing palace staff Lee Rin and Do Ha vow to stop them. Do Ha sees her sister Yeon Ha's face superimposed on Mo Yeon Wol, preventing her from being harmed.
Lee Rin sees Park Soo Jong with Sadam and tells Kisan that Sadam is the true cause of the smallpox, but Kisan refuses to listen. By Sadam's spell, vengeful spirits are sucked into the Imoogi's (serpent's) reverse scale.
Lee Rin asks Moo Seok to join him in fighting the smallpox goddess (Mamashin). Meanwhile, Soo Ryun is tortured.
Lee Rin informs Jo Sang Heon that Sadam is the one who gathered the vengeful spirits. Sang Heon then explains what happened to King Haejong. Park Soo Jong refuses to ally with the 'lowly shaman' Sadam and has him thrown out.
Lee Rin asks Jo Sang Heon what happened to his father, but Sang Heon coldly turns him away, saying it's none of his business. Meanwhile, Sadam and Hojo are pleased, believing vengeful spirits will heal the dragon god.
Lee Rin is worried about Do Ha's wound. Seeing Lee Rin and Do Ha together, Jo Sang Heon stops Lee Rin. Moo Seok is surprised to see Sang Heon take down five thugs at once.
While Ok Mae calls for Jo Sang Heon, Lee Rin slips into a room after a scuffle with Do Ha, narrowly missing Sang Heon. Moo Seok feels awkward as Do Ha applies medicine to his arm wound.
While trying to save 'Yeon Ha', the only Mago tribeswoman who can bloom the flower, Haejong is ensnared by Sadam's magic. Succumbing to madness, King Haejong brings great tragedy to the palace.
Meteorites fall on Hanyang, breaking the palace's barrier and allowing ghosts (gwimul) to invade. They attack Prince Lee Rin, who falls mysteriously ill. King Haejong learns the only cure is the 'Millennium Flower' and departs for Mount Baekdu to find it.
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