
When sunlight shines on the urn containing Nip's cremated remains, Ning uses a curtain to shield the urn to prevent Nip's soul from being destroyed by exposure to sunlight. Ning and Nip are eventually able to see each other briefly near dawn when they manage to leave the Underworld.
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As the Underworld is full of spirits, they have a hard time finding her. Yin reluctantly opens a temporary portal into the Underworld and brings Ning along to search for Nip. Ning is unwilling to give up on Nip and he insists that Yin help him.

As punishment for betraying her master, Nip's soul is banished to the Underworld.

Yin fights with the Tree Demoness and attempts to free Nip's soul but fails. Ning attempts to free her from her suffering so he seeks help from Yin Chik-ha. She explains that as long as her remains are buried at the foot of the tree, her spirit will be forever enslaved by the Tree Demoness. Nip tells Ning her story of how she became eternally bound to the servitude of a sinister Tree Demoness. That night, he returns to the temple and confirms his theory that Nip is actually a ghost. In the morning, however, after he recalls that night's events, he becomes increasingly fearful and superstitious because Yin Chik-ha, a Taoist priest, told him that the people he saw in the temple are ghosts. That night, he meets a beautiful and alluring young maiden, Nip Siu-sin, and falls in love with her. He has no choice but to take shelter in a deserted temple in the forest on the outskirts of the town. Ning Choi-san, a timid debt collector, goes to a rural town to collect debts but fails and runs out of money. The film was ranked number 50 of the Best 100 Chinese Motion Pictures presented at the 24th Hong Kong Film Awards, the Special Jury Special Award of the 16th French Science Fiction Film Festival and the Best Film Award of the Portuguese Science Fiction Film Festival.
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Most notably it boosted the stardom of Joey Wong, won Leslie Cheung popularity in Japan, and sparked a trend of folklore ghost films in the Hong Kong film industry, including two sequels, an animated film, a television series and a 2011 remake.
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Although the film could not gain access to movie theaters in mainland China when it was first released, it became a cult film among young people in the mainland, especially the generation born in the 1980s. The film was popular in Hong Kong and several Asian countries, including South Korea and Japan. The plot is loosely based on a short story about Nie Xiaoqian from Qing dynasty writer Pu Songling's Strange Stories from a Chinese Studio and is also inspired by the 1960 Shaw Brothers Studio film The Enchanting Shadow.

'The Ethereal Spirit of a Beauty') is a 1987 Hong Kong romantic comedy horror film starring Leslie Cheung, Joey Wong and Wu Ma, directed by Ching Siu-tung and produced by Tsui Hark. A Chinese Ghost Story ( Chinese: 倩女幽魂 Wade–Giles: Ch'ien-nü Yu-hun lit.
