Daniel moves to Los Angeles with his mother, Lucille, and soon strikes up a relationship with Ali. He quickly finds himself the target of bullying by a group of high school students, led by Ali's ex-boyfriend Johnny, who study karate at the Cobra Kai dojo under ruthless sensei, John Kreese. Fortunately, Daniel befriends Mr. Miyagi, an unassuming repairman who just happens to be a martial arts master himself. Miyagi takes Daniel under his wing, training him in a more compassionate form of karate for self-defense and later, preparing him to compete against the brutal Cobra Kai.

After discovering that his father is at death's door, Mr. Miyagi sets out to Japan, to see him with Daniel. Upon arriving, Miyagi must confront an old rival. Meanwhile, Daniel encounters a new love, and some new enemies.

Despondent over the closing of his karate school, Cobra Kai teacher John Kreese joins a ruthless businessman and martial artist to get revenge on Daniel and Mr. Miyagi.

Mr. Miyagi decides to take Julie, a troubled teenager, under his wing after he learns that she blames herself for her parents' demise and struggles to adjust with her grandmother and fellow pupils.

Sequel to “Cobra Kai” and “The Karate Kid”, with Ralph Macchio and Jackie Chan reprising their roles.