This is the best of the UNDERWORLD series, focusing on how the war began between the vampires and the werewolves. The vampires, lead by the evil, creepy Viktor, live in this huge cliffside stone fortress and constantly have to defend it against the werewolves, which continually try to attack it. These werewolves are stuck in their monstrous form, unable to change into humans. However, when a human-looking baby is born from one of these creatures, Viktor (Bill Nighy) decides to spare its life and raise it as a servant. This is Lucian. And since Lucien (Michael Sheen) is half human Viktor decides to start breeding/creating a whole line of these shape-changing werewolves to help protect the vampires against the full-blooded werewolves.
Viktor has a daughter, Sonja (Rhona Mitra of DOOMSDAY), who is secretly in love with Lucian, and she frees him when her father is going to kill him. Lucian escapes with a few others into the nearby woods and starts freeing slaves for his army. He gives them the option if they want to become immortal Lycans or not. He also is able to communicate with the pureblood werewolves and gets them on his side for the final battle.
Yes, basically this is the "Romeo and Juliet" story, but it works. And just why Lucien is so bent on killing the vampires is explained by what Viktor decides to do with his wayward daughter.
The end also ties in neatly with how the very first movie begins--and in doing so makes those previous movies all that much better by filling in the blanks. Recommended.
Director Patrick Tatopoulus more than makes up with this movie for designing that lame-ass American version of GODZILLA a decade ago.