The novel Water Margin by Shi Nai'an details the rise and fall of a group of bandits during the time of the Song Dynasty in China. Among the themes addressed in this novel are the abuse of power by officials, the unjust punishment of the loyal and the power of chivalry and loyalty. Much can also be learned from the novel about the customs and habits of the early Chinese people as well as their thought and belief systems.

The story of Water Margin begins when Marshal Hong Xin is sent to a Taoist monastery to request a cure for a plague currently being suffered by the people of the Eastern Capital. Hong causes problems when he commands the monks of the monastery to free the 108 demons being held captive in the Suppression of Demons Hall. It is written in the book that these demons would cause trouble if released. The conclusion of the first chapter, however, indicates that 108 stars, corresponding to the number of demons released, would also appear on the earth.

These 108 stars, 36 stars of heavenly spirits and 72 stars of earthly spirits, become the bandits of Liangshan Marsh. These men become bandits not because they are rebels, but because they have in some way been framed by corrupt officials and either forced to do something illegal because of the fake crime, or just accused of something they didn't do. Eventually, there are 108 of these bandit chieftains, along with numerous other warriors, who gather in the marshy stronghold at lm and wait for amnesty to be granted to them so that they can once again serve their country without the mark of being a criminal.

Even when amnesty does come, however, the bandits are still not completely free to serve their country. They are first sent to northern China where they defeat the invading Liao forces. Next, they are sent to southern China where after many battle casualties, they manage to overcome invading rebel forces led by Fang La. At the point that the chieftains are set to receive honors from the Chinese emperor, there are only 27 of the men remaining. Most of these refuse the leadership positions offered them in hopes of a quieter life. The two main leaders of the group of bandit chieftains, Song Jiang and Ju Junyi accept leadership roles, but are murdered by the corrupt officials who still regard these former bandits as enemies. Since the emperor never realizes it is his own officials who killed Song and Ju, these officials are never punished. After their deaths, however, Song and Ju are widely honored and worshipped.