Our hero's father, Captain Alejandro de la Vega, has been sent with two soldiers to protect a Catholic Mission in California from a local uprising of Indians. After fending off the attack and capturing the leader, Chief Grey Wolf, Captain de la Vega's life takes a strange turn. It seems that Grey Wolf is actually a woman, and de la Vega finds himself hopelessly smitten with her charms.

Toypurnia, Grey Wolf's real name, turns out to be the half-breed daughter of an Indian medicine woman, White Owl, and a Spanish sailor who had deserted his ship and lived with the Indians until his death. Equally enamoured of the dashing Captain, she agrees to marry him three years later when he has finally overcome his fear of the social repercussions of marrying a mixed blood.

So even before birth, our hero is marked as different. The quintessential Romantic hero, mixed blood, connections to strange native rituals which will give him mysterious powers, and that little bit of the outsider that is so fascinating to women everywhere.

But he is also the son of a Spanish nobleman and thus has to be prepared for life properly, which means he has to be sent to Spain for schooling once he is of age. But before that, three events occur that are to play formative roles in the development of Zorro.

Along with his milk-brother Bernardo (Diego's mother had almost died in childbirth so he had been nursed by an Indian women who had given birth simultaneously, and he became irrevocably tied to her son), he discovers a secret network of ancient Indian caves that back up onto his father's hacienda. It's here that the men of White Owl's tribe would go for their initiation rites; to discover the mysteries of the universe.

Just as importantly, they discover a tunnel that leads into a room in the hacienda. It turns out that in the planning of the house, Diego's mother had deliberately chosen its location to allow for that very purpose.

It's also with Bernardo that Diego first bears witness to the injustices of the world. Since the time of their settling California, the Spaniards have been gradually eroding land away from the Indians. The boys come across a group of neighbouring ranchers "liberating" some territory by destroying a small village. They kill the men, hang an elderly chief, and scatter the women and children to starve in the wilderness

Just before the boys are to set sail for Europe, White Owl comes for the boys to take them on a vision quest. After eight days of ritual and fasting, they were turned loose in the wood to quest for their spirit animals. This, of course, is where the name Zorro, the fox, comes from.