In 1991, Hong Kong police inspector Wong Chi-shing meets his informant, Hon Sam. At the same time, Lau Kin-ming, Hon's prospective mole within the Royal Hong Kong Police Force, assassinates Hon's triad boss, Ngai Kwun. Lau is later greeted by Hon's wife, Mary, who casually ascertains whether he has any reservations about his mission for Hon. While giving him cash, Mary advises Lau to maintain a low profile. She also confesses that she was the person who ordered the hit on Ngai Kwun, admitting that Hon has no knowledge of this transgression and urges Lau to remain silent. Mary wants Hon to replace Ngai Kwun as the triad boss.
Meanwhile, instructors at the police academy discover that Chan Wing-yan, a promising but troubled cadet, is the half-brother of Ngai Kwun's heir, Ngai Wing-hau; he is subsequently discharged from the police force. Chan is later approached by Wong, who asks him why he wants to be a cop; Chan replies, "I want to be a good guy." Wong subsequently makes Chan an undercover cop, sending him to prison to get close to one of Hon's men, Keung. Meanwhile, Ngai Wing-hau replaces his father as the triad boss; he is the only Ngai child directly involved in the family business. With Ngai dead, four other underbosses, the "Big Four", dismiss Ngai and debate on whether to continue paying their dues to his family. However, Ngai forces them to pay up by blackmailing them individually with his knowledge of their mutual betrayals. Hon acts as an agent provocateur for Ngai in this affair.
By 1995, Chan has become a small-time gangster while Lau rises as a rookie cop. Chan's continual association with Hon and Ngai causes his girlfriend to have an abortion because she does not want their child to follow in Chan's footsteps. Ngai wishes the troubled Chan to be integrated into the Ngai family and invites him to his daughter's birthday party, where he announces that he wants to retire in Hawaii and divide his business among the Big Four. He also gives Hon control over a Thai cocaine smuggling ring. Meanwhile, Hon leaks information about criminal dealings to Lau, who is able to apprehend many local gangsters and earn a promotion in rank.
During Ngai's next drug deal, Chan tips off the police with a Morse code message about an abrupt change of plans for the meeting. The police show up and arrest Ngai as the deal is taking place. However, no drugs are found in the suitcase, which instead contains a videotape showing that Wong conspired with Mary to have Ngai Kwun murdered. Caught off guard by the sudden turn of events, the police release Ngai. Wong is relieved of his police authority pending an investigation for misconduct. While Ngai is taken in for questioning, his men assassinate the Big Four and set into motion his plans for vengeance against his father's murderers. An ambush awaits Hon as he meets Ngai's contact in Thailand. A bomb is set off in Wong's car; while Wong is unharmed in the attack, his superior and friend, Chief Inspector Luk, dies in the blast. Lau saves Mary from an assassin and takes her to a safehouse, but decides to have her killed when she rejects his feelings toward her. He reveals to Ngai's men that she will be at Kai Tak Airport, where she gets mown down by a car.
In 1997, Lau is picked as one of the officers to preside over the ceremony signifying Britain's handover of Hong Kong to China. Wong is cleared of misconduct by his superiors and reinstated to his former post. Ngai attempts to enter politics but his support disintegrates after Hon, who survived the shooting in Thailand, turns on him and provides evidence to Interpol about his illegal dealings. Wong brings Hon back to Hong Kong under witness protection after Hon agrees to testify against Ngai in court. In the meantime, Ngai sends his men to Thailand to take Hon's family hostage in an attempt to threaten Hon to back out. During the confrontation between Ngai and Hon, Hon reveals to Ngai that his Thai mafia friends are also holding Ngai's family hostage in Hawaii and that he has no real family in Thailand. Infuriated, Ngai holds Hon hostage at gunpoint just as Wong and the police show up. During the standoff, Wong fatally shoots Ngai, who dies in Chan's arms. Moments before succumbing to his wound, Ngai discovers the wire in Chan's jacket and realises that his half-brother is an undercover cop.
Hon's tactics against Ngai lead to a falling out between him and Wong. Shortly after their final meeting, Hon reluctantly lets his Thai friends murder Ngai's family in Hawaii. The pieces are set in place for the first film: Hon goes down the dark path of replacing Ngai as the triad boss, becoming Wong's new foe; Lau is a police inspector and Hon's mole; Chan is forced to remain undercover, returning to join Hon's triad. As the handover ceremony takes place, Hon sheds tears over the loss of Mary before hosting a party. Back at police headquarters, Lau handles a case involving a young woman, coincidentally also called Mary, who becomes his fiancée in Infernal Affairs.Shawn Yue as Chan Wing-yan (陳永仁), Ngai Wing-hau's half-brother and an undercover cop.
Edison Chen as Lau Kin-ming (劉健明), Hon Sam's mole in the police force.
Anthony Wong as Wong Chi-shing (黃志誠), a police inspector who aims to take down the Ngai family triad.
Eric Tsang as Hon Sam (韓琛), a member of Ngai's triad.
Carina Lau as Mary, Hon Sam's wife.
Francis Ng as Ngai Wing-hau (倪永孝), the boss of the Ngai family triad.
Hu Jun as Luk Kai-cheung (陸啟昌), a police superintendent who is Wong's close friend and partner.
Joe Cheung as Ngai Kwun (倪坤), Ngai Wing-hau's father who was assassinated by Lau.
Henry Fong as Gandhi (甘地), one of the Big Four.
Peter Ngor as Negro (黑鬼), one of the Big Four.
Arthur Wong as Kwok-wah (國華), one of the Big Four.
Teddy Chan as Man-ching (文拯), one of the Big Four.
Chiu Chung-yu as Mary, the girl Lau meets in the police station at the end of the film.
Phorjeat Keanpetch as Sunny, the Thai drug lord who tried to kill Hon Sam.
Ye Shipin as a socialite at the handover party
Tay Ping Hui as Ngai Wing-hau's lawyer
Roy Cheung as Law Kai-yin (羅繼賢), an undercover cop in Ngai's triad.
Liu Kai-chi as Uncle John (三叔), Ngai's right-hand man.
Chapman To as "Silly" Keung (傻強), Chan's friend and fellow triad member.
Hui Kam-fung as the principal of the police cadet school
Alexander Chan as Ngai Wing-yee (倪永義), Ngai Wing-hau's younger brother.
Andrew Lin as Ngai Wing-chung (倪永忠), Ngai Wing-hau's elder brother.
Kara Hui as Ngai Wing-hau's elder sister
Wan Chi-keung as Superintendent Leung (梁Sir), Wong's superior.
Chan Charoenwichai as Paul, the Thai drug dealer who became friends with Hon Sam.
The film's score was composed by Chan Kwong-wing. The theme song, Eternal Realm (長空; Changkong), was composed by Wong Ka-keung, lyrics provided by Wong and Yip Sai-wing, and performed by the band Beyond.
The film was highly anticipated prior to its release due to the success achieved by Infernal Affairs. However, the general response to the film was mixed.
The film grossed HK$24,919,376 — big by 2003 Hong Kong standards, but only about half of the original's earnings.
Although Infernal Affairs II earned twelve nominations for the 2003 Hong Kong Film Awards, it could not match its predecessor's success. The film won only one award, Best Original Film Song, for the song "長空" (performed by Cantopop band Beyond). The film won the Best Film award at the Hong Kong Film Critics Society Awards.
23rd Hong Kong Film AwardsWon: Best Original Film Song (Wong Ka Keung, Yip Sai Wing, Beyond)
Nominated: Best Film (Andrew Lau)
Nominated: Best Director (Andrew Lau, Mak Siu-fai)
Nominated: Best Screenplay (Mak Siu-fai, Chong Man-keung)
Nominated: Best Actor (Francis Ng)
Nominated: Best Actress (Carina Lau)
Nominated: Best Supporting Actor (Chapman To)
Nominated: Best Supporting Actor (Liu Kai-chi)
Nominated: Best Cinematography (Andrew Lau, Ng Man-ching)
Nominated: Best Editing (Curran Pang, Danny Pang)
Nominated: Best Original Film Score (Chan Kwong-wing)
Nominated: Best Sound Effects (Kinson Tsang)
10th Hong Kong Film Critics Society AwardsWon: Best Film