Daniel (Ralph Macchio), a teenage boy, moves from the east coast to Los Angeles when his mother gets a new job. School life isn't easy for Daniel, especially when he starts to like Ali (Elisabeth Shue). Her jealous boyfriend (William Zabka) and his gang, who train at the local karate studio, are out to get Daniel.
When they attack Daniel, leaving him unconscious, Miyagi (Pat Morita), a handyman at the apartment complex where Daniel lives with his mother, steps in and gets rid of the bullies. He agrees to teach Daniel the true form of karate, not the violent and sadistic approach that the bullies use.