A fortune-teller in Liushui Town predicted that a river goblin would soon drown someone, then disappeared. His adopted son, Qi Sheng, whom he had raised, searched everywhere for him without success.
For decades, the fortune-teller had enjoyed predicting supernatural events. Once, he said a cat demon would appear in town, then dressed up as one to scare people. He was caught in the act, and from then on, no one in town believed a word he said.
Not long afterward, someone in town really did drown in the river. An investigation revealed it was murder. The townspeople believed the fortune-teller had deliberately killed the victim to make the neighbors believe his prediction about the river goblin. The police also began hunting him.
At the same time, however, a group of townspeople insisted that the victim really had been killed by a river goblin.
To prove his adoptive father's innocence, Qi Sheng sought out those who claimed a river goblin was responsible, but they repeatedly shut their doors in his face.
Then a second drowning occurred in town, carried out in the same way as the first.
The wanted fortune-teller secretly returned to town, only to be found dead in the river the very next day.
Not long afterward, the neighbors saw a water-demon-like monster emerge from the river with their own eyes.
This reminded Qi Sheng of the ghost stories his adoptive father had told him twenty years earlier. From them, he uncovered the truth behind the string of murders. The fortune-teller's fantasies had spilled into reality, becoming the town's eternal legend...