John Reid, the sole surviving Texas Ranger of a murderous ambush, becomes the great masked hero with his companion, Tonto.

The Lone Ranger still on the trail of Butch Cavendish and his gang sends Tonto to the town of Colby to organize a posse with the sheriff. Tonto receives no help and the suspicion is a number of people in the town are working for Cavandish. The Lone Ranger must launch a daring plan to foil the Cavendish gang's plan to take over the town of Colby.

A promoter wants to purchase the famous war horse 'Black Cloud' owned by the Chief Lame Bear. Instead of purchasing the horse the people he employs steal the animal instead, taking Lame Bear's son as hostage in the process. After the capture of Tonto, the Lone Ranger needs to use all his diplomacy and cunning as a law enforcer to stop out right war between Lame Bear's tribe and the US cavalry.