The next three years were spent creating the creature effects, all of which were done in house by Shim's Younggu-Art Movies company. The completed film premiered at the American Film Market in early 2007. The film was released in South Korea on August 1 2007. In the U.S., the film was released on September 14 2007.
On August 7 2007, South Korea's MBC Morning Live TV Show broadcast the film's final scene on TV without the permission of the studio, causing a controversy. A few days later the Ministry of Culture and Tourism released a statement in which they said that the incident did not violate South Korean copyright laws.
Nineteen years later, Ethan has become a television news reporter, in which role he discovers while investigating a disaster site that Buraki has returned. He then inquires into the news office's database for the location of a Los Angeles-based girl named Sarah, who is either nineteen or twenty years old and bears a dragon-shaped mark on her shoulder. His friend Bruce, despite his disbelief, helps Ethan search.
The Sarah Ethan wants, one Sarah Daniels, sees Ethan's news report and is terrified by the tracks Buraki has left. She hurries home and surrounds herself with protective symbols, which she does not understand but which she feels are the only tools she has by which to protect herself. Her friend Brandy, concerned but not quite understanding Sarah's problem, takes her to a tavern for a drink, hoping to take her mind off of her fears. Sarah, still afraid, leaves the tavern and is attacked outside by three thugs, who are driven away by Jack. Word of her escape later reaches Ethan through another reporter. Buraki and his army continue to search for Sarah, attracting the attention of the U.S. government and the notice of at least one civilian.
Ethan eventually finds Sarah at a hospital. Although the hospital's receptionist refuses him entry, a doctor later revealed to be Jack in disguise allows him into Sarah's room. Ethan is about to explain the truth of their situation to Sarah when Buraki attacks the hospital, intent on capturing her. Ethan and Sarah flee in a car driven by Bruce, with Buraki in pursuit. They are stopped by a commander of the Atrox Army, but eventually escape him due to another intervention by a disguised Jack.
Ethan subsequently explains the story to Sarah, who accepts it as true and Ethan as her protector. He then takes her to a practitioner of hypnotherapy, who helps her revive the memories of her previous life as the unsuccessful Yuh-Yi-Joo. The energy released by her body during the hypnotherapy session attracts Buraki, who destroys the hypnotherapist's house and follows Sarah and Ethan.
In a car, Ethan and Sarah flee to a more densely-populated area of the city, where they meet with Bruce in a restaurant. When Bruce has left Ethan alone, Jack warns Ethan that the Yuh-Yi-Joo must fulfill her destiny. Ethan, defiant as a result of his new attachment to Sarah, demands autonomy.
Moments later, Buraki finds Ethan and Sarah again. They attempt to escape him, resulting in a chase scene that culminates atop the U.S. Bank Tower. There, Buraki is distracted by several military helicopters, who proceed to attack him. Buraki then summons the Atrox Army to help him. This legion enters the city and advances through the streets, engaging the U.S. Army, the Los Angeles Police Department, and SWAT teams as it goes. Here the Atrox Army is shown to consist of black-armored, humanoid warriors; therapod-like cavalry called "Shaconnes"; small, winged western dragons called "Bulcos"; and huge, slow-moving reptiles identified in the dialogue as "Dawdlers", who carry powerful rocket launchers on their backs. The Atrox Army proceeds, crushing the American soldiers and their weapons while suffering moderate casualties. Meanwhile Ethan and Sarah are taken to an empty garage by two federal officers. The senior officer reveals that he has researched the legend of the Imoogi, and attempts to kill Sarah so that Buraki and his army would depart for another five centuries. The junior officer, horrified, kills his partner and gives the fugitives his car whereby to escape.
Ethan and Sarah then enter the rural countryside in the car. Sarah, having given up hope of escape, remarks that wherever she goes, the Imoogi will find her. Ethan, who seems bent on saving her both from Buraki and from the Good Imoogi for whom she is destined, refuses to admit this. Sarah pauses, then tells him that she is now twenty years old, revealing herself to have come into her full power as Yuh-Yi-Joo. Immediately, the Bulcos knock the car over and capture Sarah.
Ethan attempts to retrieve Sarah, but is halted by the Atrox Leader, with whom he engages in combat. The Atrox Leader is killed by Ethan's pendant when he inadvertently strikes it with his sword. A revived Buraki knocks Ethan down and attempts to eat Sarah, but is unexpectedly attacked by the Good Imoogi. Ethan and Sarah then watch as Buraki and the Good Imoogi battle furiously. Ultimately, Buraki wins. He then approaches Sarah, who offers herself to him. Just as Buraki is about to absorb Sarah's power, she redirects it into the open mouth of the Good Imoogi, who is instantly revived and continues to fight Buraki, transforming as he does into a gigantic Korean dragon. The two struggle for a few moments until the Good Imoogi, now the Celestial Dragon, disengages from Buraki, flies to the top of the latter's fortress, and burns him to ashes.
Having slain Buraki, the Celestial Dragon approaches Ethan, allowing Sarah's spirit to speak with him. Sarah, now a fully fledged Yuh-Yi-Joo, requests Ethan not to be sad, adding that she will love him for all eternity. The Celestial Dragon then takes Sarah back into his body and ascends to the heavens. Immediately, Jack appears behind Ethan, reminding him that the two of them have been given a great honor. Jack then dissolves into dust. Ethan, recognizing that he will never see Jack again, whispers "Good-bye, old man". His own fate is left undisclosed.
Within nine days of its South Korean release, D-War attracted five million viewers, setting a national box office record for an opening week. The seemingly positive reaction from the Korean population, as indicated by the movie's box office success in Korea, was widely attributed to the film's appeal to Korean nationalism; a logical impression drawn from Shim's message at the end of the Korean version of this film, "D-War and I will succeed in the world market without fail," accompanied by the Korean folk anthem, "Arirang". However, despite box office success, D-Wars was far from critically acclaimed by either Korean critics or Korea's general public. Korean film critic Kim Bong-sok said, "They want it to be successful in the U.S. because it's Korean, not because it's good" and called the film "immature and poorly made" and "below criticism". Other reactions from Korean critics have been similar.
D-War set a record of grossing $20.3 million in South Korea in its first five days in 689 theatres. As of September 1, the film has grossed $44 million in Korea and another $10 million in other countries, totaling a worldwide gross of $54 million as of September 16. In North America, the film grossed $5 million on 2,275 screens in its opening weekend. As of November 25, 2007, the film has grossed $10,977,721 in North America, making it the highest grossing Korean-made film released theatrically in North America.
Since then, D-WAR has been released theatricaly in Malaysia and China, both with moderate critical reaction. China was the only one to live up to the South Korean release record, spawning 3,000,000,000 admissions and a premiere including pop idol Libing Chen.