Dr. Darkman (character) is developing a new type of synthetic skin to help burn victims, but cannot get past a flaw that causes the skin to rapidly disintegrate after 99 minutes. His girlfriend, attorney Julie Hastings, discovers the Belisarius Memorandum, an incriminating document that proves developer Louis Strack Jr. has been bribing members of the zoning commission. When she confronts Strack, he confesses, showing Julie that he plans to design a brand new city, creating a substantial number of new jobs. He warns Julie that mobster Robert Durant also wants the document.
Darkman and Durant return and they hate each other as much as ever. This time, Durant has plans to take over the city's drug trade using high-tech weaponry. Darkman must step in and try to stop Durant once and for all.
Peyton Westlake (Arnold Vosloo) is still searching for the key to creating a permanent liquid-skin formula to repair his burned face and hands. After Westlake stops a criminal exchange spearheaded by corrupt businessman and Boss (crime) Peter Rooker (Jeff Fahey), he is approached by Dr. Bridget Thorne (Darlanne Fluegel). Thorn, one of the physicians who saved Westlake's life following his Darkman, claims that she wants to help Westlake discover the key to his liquid skin, and also repair his nervous system, allowing him to regain some of his sensory loss. Using a laboratory Thorn has set up in an abandoned factory Westlake is finally able to devise a small amount of permanent liquid skin, which does not Photosensitivity as his other samples have.