The film is set in Shanghai in the 1940s, when gangs ruled the city. One place the gangs avoid is Pig Sty Alley because the residents are too poor to extort money from. It gets a bit complicated when some fake gangsters, claiming to belong to the Axe Gang, try to intimidate the residents. Some of the alley denizens turn out to be retired kung-fu masters and fight them off. This soon draws the attention of the real Axe Gang, and the fake gangsters are caught in the middle. The Axe Gang wear top hats, making them reminiscent of characters from Gangs of New York — in fact, every scene in Kung Fu Hustle is packed with references to other films.

Other jokes are more universal. An impossibly high-speed chase is inspired by Road Runner cartoons. The exaggerated computerized special effects reinforce the film's cartoonish nature. The long arm of Bollywood can be seen when the gangsters do a spontaneous street dance. There's even a touch of the overly sweet romance that used to appear in Charlie Chaplin's slapstick films.

But elaborate martial arts displays are the main offering. The way-over-the-top fight scenes are choreographed by Yuen Wo-Ping, who worked on The Matrix and Kill Bill. He shows he also has a talent for humor. The first fights are fairly credible. Soon, however, people are being punched as high as the clouds. One of the Pig Sty denizens — a woman in curlers with an ever-present cigarette — uses a legendary scream that can send shock waves as her chief weapon.

Stephen Chow, who stars as one of the fake gangsters, also directed and co-wrote the film. He plays a likeable loser, a character who has good intentions even if his actions at first don't show it. Chow doesn't hog the limelight, like some action stars. He lets others show their skills.