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.

New Jersey teen Daniel LaRusso moves to Los Angeles with his mother, and soon strikes up a relationship with Ali. He quickly finds himself the target of bullying by a group of thugs, 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 a family tragedy, kung fu prodigy Li Fong is uprooted from his home in Beijing and forced to move to New York City with his mother. When a new friend needs his help, Li enters a karate competition – but his skills alone aren't enough. Li's kung fu teacher Mr. Han enlists original Karate Kid Daniel LaRusso for help, and Li learns a new way to fight, merging their two styles into one for the ultimate martial arts showdown.