The existence of The Shadow is regarded by the public as nothing more than an urban legend. But The Shadow's secret is endangered when Cranston meets Margo Lane (Penelope Ann Miller), an eccentric socialite who is a natural telepath. He is intrigued, but unable to continue seeing her as he cannot keep his thoughts from her.
Cranston is challenged by Shiwan Khan (John Lone), another student of the Tulku who possesses even sharper powers, but had successfully resisted redemption and hence had stayed evil. Khan is the last descendant of Genghis Khan and plans to fulfill his ancestor's goal of world domination. He offers Cranston an alliance, sensing that bloodlust and a thirst for power still exist in his heart, but Cranston refuses. Cranston acquires a rare coin from Khan and learns that it is made of a metal called "bronzium" (an impure form of uranium) that theoretically can generate an explosion large enough to destroy a city. This suspicion is confirmed when he learns that Margo's father Reinhardt (Ian McKellen), an atomic scientist working for the War Department, has vanished.