Mr. Miyagi, a karate master, is asked to attend a commemoration ceremony for Japanese soldiers who fought for the US during World War II. While there, he meets the widow of his commanding officer, a woman he had saved during the war. He also meets her teenage granddaughter, Julie Pierce, who he quickly realizes is troubled and in need of guidance.
Julie is struggling with the recent loss of both her parents in a car accident. She is angry and rebellious, often fighting with her grandmother and getting into trouble at school. Mr. Miyagi sees the pain and anger in her and offers to teach her karate to help her deal with her emotions and channel her energy into something positive.
At first, Julie is resistant, but she eventually agrees to train with Mr. Miyagi. She learns not only karate but also valuable life lessons about respect, discipline, and inner strength. She also meets Eric, a young man who is also training in karate with Mr. Miyagi.
However, things take a dark turn when Julie and Eric become the targets of a group of bullies at their school. The bullies discover that Eric has a disability and target him because of it. Julie stands up for Eric, but the situation escalates, and Mr. Miyagi must intervene to protect his students.
In the end, Julie and Eric compete in a karate tournament and show off their newfound skills. Meanwhile, Julie reconciles with her grandmother, and she becomes a more positive, confident person thanks to Mr. Miyagi's guidance and support.