The plot of the film loosely follows the book of the same name – the third volume of the Crusades trilogy, spanning the period of about 1187 to 1205. Arn is the commander of a Templar garrison in Gaza. He is commanded to join a Templar force intercepting the army of Saladin. Due to the arrogance of the new Templar Grandmaster Gerard de Ridefort, the Crusaders are destroyed in the ensuing Battle of Hattin. Arn is wounded but Saladin recognizes him and saves Arn from execution. Arn wakes in Damascus, his wounds treated; Saladin sends him home with his friendship as he prepares to take Jerusalem. Cecilia is finally allowed to leave the monastery where she has done penance for twenty years, meeting her son Magnusfor the first time. She soon hears of the fall of Jerusalem and the destruction of the Templars and believing Arn dead decides to become a nun for the rest of her life, being offered the post of Abbess by the Folkung clan. Arn meets her as she is just about to enter the convent, and they marry at last, building an estate, Forsvik, where Arn has gathered craftsmen from all over Europe and the Holy Land. Arn is introduced to his son Magnus, born in his absence; after a little time a daughter named Alde is born, and Forsvik grows rapidly. Arn takes young men and boys to become knights-in-training. Six years later King Canute I of Sweden dies, leaving children as heirs. King Sverker II retakes the crown with Danish help and attempts to murder the sons of Canute, prevented by the intercession of a Folkung who has tricked Sverker into thinking he was a double agent. Forced to war, the first of what is to be a nearly 600-year-long conflict between Sweden and Denmark, Arn leads the Folkung against the Sverker-Danish force at the Battle of Lena, aided by Arabic craftsmen and the Norwegian Templar, Harald Øysteinsson. Arn destroys the Danish cavalry tricking them to charge into a rain of arrows. Arn charges forward on horseback to attack King Sverker, and is intercepted by Ebbe Sunesson, the leader of the Danes; in the ensuing duel Arn kills him, taking a fatal wound in the exchange. The Folkung emerge victorious, but Arn dies of his wound upon his return to Forsvik. The film concludes with an epilogue foreshadowing the completion of the consolidation of Sweden into a unified kingdom a generation later through Birger Jarl, identified as Arn's grandson.
In addition to Swedish as the film's primary language, several other languages were used in the dialogue to heighten the cultural differences: Norwegian, Danish, English, and Arabic. English was used to represent Latin and French speakers. The part of the dialogue that is not in Swedish was subtitled in Swedish.
