In the shocking opening scene of The Living Skeleton, a group of ruthless hijackers gun down the entire crew of a ship and make off with a fortune in gold bullion. Three years later, the criminals are killed one by one by what appears to be the ghost of one of their victims, a young woman who they also raped. In reality, it is the rape victim's identical twin sister Saeko (Kikko Matsuoka) who is bumping off the bad guys, driven by the spirit of her murdered sibling.
The plot for this movie is wonderfully daft, with underwater skeletons (the prop guy clearly having very little knowledge of what a skeleton really looks like), bat attacks (hilarious rubber bats on strings), and several twists, one of which involves a ridiculous Scooby Doo style unmasking, and another that throws a mad scientist into the mix. The sheer preposterous nature of proceedings makes this Japanese horror a treat for those who enjoy their films a bit bonkers.
Director Hiroki Matsuno spends much of the running time building up a doom-laden atmosphere (aided by a haunting Morricone-style score), but abandons all of that for a finalé that dials up the craziness, with the bludgeoning of a dog, a cold-hearted strangulation, several characters dissolved in acid, and a spot of ambiguity, Saeko possibly being a ghost herself by the end. The violence is surprisingly graphic for 1968 (especially a dagger in an eye).
As others have noted, the opening scene is reminiscent of Ghost Ship (2002) and the film may have provided inspiration for John Carpenter's The Fog (1980).