In A.D. 1555, Connor MacLeod (Christopher Lambert) returns to his former home in Glenfinnan, Scotland, to save his mother from his former friend and village priest Jacob Kell (Bruce Payne). Kell executes Connor's mother for witchcraft. Connor kills both Kell and Kell's adopted father, Father Rainey, and sets Glenfinnan ablaze. Jacob Kell is reborn as an Immortal, and vows vengeance against Connor for Rainey's death. He spends the next four centuries killing people Connor cares about. Kell amasses great power by ignoring the rules of The Game; he recruits several lesser Immortals as disciples, who overpower other Immortals so Kell can take their heads. By the turn of the century, Kell has 661 Immortal kills (compared to 262 for Connor MacLeod, and 174 for Duncan MacLeod).
Ten years before the present-day events of the film, Kell orchestrates the death of Connor's adopted daughter Rachel Ellenstein. Heartbroken, Connor departs for The Sanctuary, where Immortals are under surveillance by a subgroup of Watchers to prevent The Prize from being won.
A decade later, Kell and his disciples attack the Sanctuary, and Connor is believed to have been beheaded along with the other Immortals there. Duncan MacLeod (Adrian Paul), compelled by a vision he has of the slaughter, begins to investigate. Meanwhile, Mathew Hale, the watcher supervising the sanctuary, looks on at the carnage, and decides that they will now turn to "volunteers" to refill their test-subjects' numbers. Duncan goes to see Methos, who tells him about the Sanctuary. Duncan cannot believe that Connor would even go to such a place. He later leaves London for New York, where he goes to Connor's loft, which was destroyed in the explosion that killed Rachel. Sensing an Immortal, he turns to see Kate (Lisa Barbuscia), his wife from 200 years before. Then Kell's posse arrives, and fights Duncan (disregarding the rule of one-on-one combat). The fighting stops when Kell arrives, but Carlos shoots Duncan, who falls on a spike, killing him. Kell is furious with Carlos, and beheads him: as the quickening begins, a van drives up to where Duncan fell, and takes him away.
Later on, Duncan wakes up, only to realize that he has been taken by Watchers who want to keep him in the Sanctuary so that he does not win the Prize. He is later saved with the help of Methos and Joe. He discovers Connor was spared by Kell, so as to allow the evil Immortal to make Connor's life even more miserable. Kell wants to kill Duncan in order to torture Connor, and given the number of Quickenings he has received, this seems quite likely to occur. Additionally, Connor is too guilt-ridden by the deaths of all his loved ones to stand up to Kell by himself. Duncan later confronts Kate (now using the alias "Faith") at a fashion shoot, and asks her why she is with Kell. She tells him how much she hates the fact that she will never have children or grow old and die, and believes that Kell understands her pain. Duncan must earn her forgiveness, or face her as an embittered part of Kell's faction. Later on in his hotel room, Kate arrives after having a chat with Kell, and the two make love. Though it would appear that she has forgiven him, it is not the case, and she tells Duncan that she will never forgive him; Duncan tells her that it is never too late for redemption, and that he will wait, even if it takes years or centuries.
Ultimately, Kell executes his group in a mock Last Supper to gain their powers, including possibly Faith, and Connor convinces Duncan that Connor must allow himself to be beheaded in order for Duncan to have enough power to rival Kell. After an emotional good-bye, Duncan follows Connor's advice, and beheads his beloved clansman.
Soon after, Duncan and Kell engage in a final battle. At first, Kell easily overpowers Duncan, even when MacLeod attempts a supposedly-unbeatable sword move that Connor taught him. Just before Duncan's impending death at the hands of Kell, Connor's spirit helps give Duncan the strength to continue. Duncan then kills Kell by jumping over him and decapitating him as he turns around. Duncan absorbs all of Kell's massive power. He then goes to Glen Coe, Scotland to bury Connor next to Connor's first wife Heather.

Question: How does Duncan kill Kell?
Answer: By decapitating him.
Alternative answer: Jumping over him and then decapitating him.