The Crusaders, led by Richard I of England, are encamped in the Holy Land, and torn by the dissensions and jealousies of the leaders, including, besides Coeur de Lion himself, Philip of France, the duke of Austria, the Marquis of Montferrat, and the Grand Master of the Templars. The army's impotence is accentuated by the illness of Richard. A poor but doughty Scottish crusader, known as Sir Kenneth or the Knight of the Leopard, on a mission far from the camp encounters a Saracen emir, with whom, after an inconclusive combat, he strikes up a friendship. This emir proves subsequently to be Saladin himself, and he presently appears in the Christian camp in the disguise of a physician sent by the Soldan to Richard, whom he quickly cures.
Meanwhile, Sir Kenneth is lured from his post by Queen Berengaria, Richard's wife, who in a frolic sends him an urgent message purporting to come from Edith Plantagenet, for whom Sir Kenneth has a romantic attachment. During his brief absence, his faithful hound is wounded and the English flag torn down. Sir Kenneth, thus dishonored, narrowly escapes execution at Richard's order by the intervention of the Moorish physician, who receives him as his slave. Kindly and honorably treated by Saladin, he is sent, in the disguise of a black mute attendant, to Richard, whom he saves from assassination. Richard pierces Kenneth's disguise and gives him the opportunity he desires of discovering who wounded the hound and tore down the standard.
As the Christian princes and their forces file past the re-erected standard, the hound springs on Conrade of Montferrat and tears him from his horse. A trial by combat is arranged in which Sir Kenneth defeats and wounds Montferrat, and is revealed to be Prince David of Scotland. The obstacle that his supposed lowly birth presented to his union with Edith Plantagenet is thus removed.