Intro: Leonardo voice-over as he tells a story taking place in Shredder’s Castle Fortress in Japan. As Foot soldiers stand guard, Hamato Yoshi breaks through the door ready to fight.
Act 1: Open in the lair as the Turtles suffer of boredom caused by an electrical blackout. Mikey panics without the option to watch TV or play video games. Master Splinter arrives with lit candles and suggests that they tell stories - like people used to do in the old days. Raph asks Leo to tell them all about the Ancient One, but Leonardo doesn't know where to begin. After a moment of thought, the stoic ninja decides that he’ll tell a tale that he heard from the Ancient One. It is about Splinter’s former master, Hamato Yoshi.
Dissolve to Tokyo, just after the war. Two boys, Hamato Yoshi and his friend Yukio Mashimi, are in the street begging for money. An elderly man (the Ancient One) walks by and drops a coin. Despite his hunger and Mashimi's protests, Yoshi returns the coin to the stout fellow. Surprised by Yoshi's honesty, the man offers to give the coin to the boy that can snatch it from his hand. Mashimi tries and fails, but Yoshi is successful - much to the elder's surprise! The man offers to buy Yoshi supper, but the boy requests that his friend join them. Somewhat reluctantly, the man agrees and takes both lads back to his dojo and feeds them.
The Ancient One decides to raise the boys as his sons and trains them in the art of ninjitsu. As the boys grow older, they fall in love with the same girl, Tang Shen, who is also an orphan being raised by the Ancient One. Shen has taken it upon herself to make the Ancient One's dojo a comfortable home, so while the young men train, she does the housework. One night, a hungry rat enters the kitchen as Shen prepares a meal. Mashimi draws his blade and prepares to kill the rodent, but Shen stops him, taking pity on the starving creature as the Ancient One had done for the three children years ago. Shen makes a pet of the rat and Yoshi builds a cage for her to keep it in. Over time it becomes apparent that while both men are in love with Tang Shen, her heart belongs to Yoshi. This does not please Mashimi.
Cut to the Tokyo streets at night. Yoshi, Mashimi and Shen walk arm-in-arm down the darkened streets when they spot some shadowy figures in the alley. A business man is being assaulted by a group of black-clad ninjas! The Ancient One's students decide they’ll join the fight to even the odds.
Act 2: The boys help the business man (who turns out to be none other than Mr. Mortu) defeat the Foot ninjas. During the fray, Mortu's forearm is cut off, revealing the robotic parts beneath his skin. Mr. Mortu offers the boys a deal - leave now with only the memory of this strange encounter, or join him and learn the entire truth. The boys decide to join Mortu and he tells them the history of the Utroms and their centuries-long battle with the Shredder and Foot Clan. The young ninjas will now join the Utroms and be trained as Guardians.
Yoshi and Mashimi return home and tell their adoptive father of their plans, but the Ancient One forbids them to become Guardians, telling them that their minds are not yet prepared for such a task. However, the boys are now men, and thus they leave their home to become Utrom Guardians.
Once in the ranks of the Guardians, Yoshi is promoted time and time again, while Mashimi is overlooked and thus grows more and more envious of his friend. Mashimi leaves the Utroms in anger and returns to the Ancient One's dojo, where he murders Tang Shen for choosing Yoshi over him!
Meanwhile, the Utrom headquarters is ambushed by an army of Foot ninjas!
Act 3: Open as the Foot attack the Utrom headquarters. The Shredder arrives and orders his minions to seal off all exits. Revealing his betrayal, Mashimi emerges from the smoke, now wearing Foot garb. Yoshi wants to punish the traitor, but Mr. Mortu orders a retreat. The Utroms make their escape, much to Shredder's dismay. The evil overlord is extremely angry with Mashimi for failing to point out the Utrom's escape pods.
The Utroms seek safety and relocate to New York. Yoshi doesn't join them as he has unfinished business to attend to first. Hamato returns to the Ancient One's home to tell him of Mashimi's betrayal and finds his adoptive father standing over the body of Tang Shen. Heart-broken, the two men bury their beloved Tang Shen. Yoshi gathers his sword and sets off to the Foot stronghold to seek revenge against his former trusted ally, Mashimi. The Ancient One cautions his son that vengeance is like a splinter - it gets under the skin and poisons your life.
Act 4: Yoshi invades the Foot headquarters and dispatches one Foot soldier after another as he makes his way to the Shredder's throne room where the villain sits watching. Once there, the courageous ninja is surrounded by hundreds of foes. Fearlessly, Yoshi challenges Mashimi to a duel. The traitor appears and mocks his former brother, sneering that he is sorely outnumbered and no duel is necessary. Surprisingly, Shredder speaks up and informs Mashimi that he will fight Yoshi alone and to the death, to make amends for his former mistake. Mashimi bows to his new master and prepares to fight Yoshi.
The two men battle fiercely. Eventually they leap into the air with their blades flashing. After the two land, Yoshi falls to his knees! But then his shirt splits open, revealing no wound. Mashimi staggers and asks for forgiveness before collapsing to the ground, dead. Shredder orders his men to capture Yoshi so they can force him to reveal the new location of the Utroms. Yoshi makes a flying leap towards Shredder's throne, but his jump carries him over his adversary and through the window behind him. Yoshi crashes through the glass and falls hundreds of feet into the pool of water below - but he has escaped with his life!
Yoshi returns to the Ancient One's dojo and collects Shen's pet rat. The adoptive father bids his son a sad farewell.
Yoshi travels to New York City and arrives at the new Utrom headquarters, the TCRI building, with his pet rat. Yoshi regards his rodent and decides to name him Splinter, to remind them both of the events that brought them here. Mr. Mortu waves to his Guardian and Yoshi walks into the Utrom's HQ.
Cut back to the present as Leonardo finishes the story. Mikey is bummed out that the story was so sad. Master Splinter points out that if things hadn't happened as they had, he would have never come to New York City. Raph pipes in that without Splinter and the Utroms, there would be no Ninja Turtles. Stricken with the severity of this realization, the boys fall silent. Master Splinter states, "The fabric of Fate weaves an endless interconnected pattern in which we are all just threads."
Meanwhile in Tokyo, we see the Ancient One entering an underground fortress where he is met by a shadowy group with burning eyes. The Ancient One pleads for the Turtles' safety and asks the council to change their plans, but as the ghostly figures address the ninjitsu master, they tell him that the decision has been made and the Turtles' fate lies in their hands!