A new criminal has begun operating in the steamy shroud that covers Steam City. The city police cannot keep up with him- he claims that his megamaton has teleport abilities, and it seems to be true. Whenever the cops get close, the machine vanishes in a mysterious fog.

Enter the Narutaki Detective Agency. Child sleuth Narutaki hits the set, and quickly gets a hunch regarding the "teleporting" mecha. While the police chase shadows, Narutaki finds the real villain, and the battle is on. After Narutaki's megamaton, Goriki, defeats the enemy machine, the criminal reveals himself- he is Knight Phantom. He speaks of his hatred for Narutaki, and vows to destroy everything he loves. But Narutaki doesn't seem to know who this stranger is.

The Crimson Scorpion is on a thieving rampage! She is using disguises fluidly and stealing all sorts of jewelry, but she keeps being disrupted by Narutaki and she ends up getting away with nothing. However, the Crimson Scorpion has set her sights on the most important piece of the Kebecks Royal Jewels – the Blue Teardrop. This necklace is worn around the neck of the reigning female royalty, and the Royal Princess of Kebecks is going to be wearing it during a ceremony when her engagement to the Steam City Prince is announced. Can Narutaki stop this criminal from stealing this important piece of jewelry?

There's a festival approaching to celebrate the dragon guardians of Steam City, but to everyone's surprise, a real dragon shows up and begins breaking into the local jewelry stores. At least, it seems to be a real dragon. The shop owners are living in a state of perpetual terror, and it seems that only Narutaki will be able to crack the case.

As Knight Phantoms reign of terror continues, Steam City has been evacuated and the city is a mere ghost town in the wake of his devastation. It's going to be Narutaki's most intense battle yet, but with so many people caring about their beloved Steam City, even enemies may be willing to lend a helping hand.