Mr. Han is a respected shifu (master) who runs a large kung fu school called wuguan in Beijing, China. Among his many students is Li Fong, a quiet teenager who has taken refuge at the school, trying to escape his tumultuous life. He is hiding from his mother, who is a doctor and has plans to relocate to New York City for work. In this transition, she asks Li to abandon martial arts and any violence, especially after the tragic death of his brother, who was killed by a rival.
As Li attempts to navigate this new chapter in life, he struggles to find companionship at his new school. He soon meets Mia Lipani, the daughter of Victor Lipani, a former boxer turned pizzeria owner. Their bond grows into a romantic relationship, but it faces challenges due to Mia's ex-boyfriend, Connor Day, an aggressive fighter known for his prowess at a local dojo focused on underground karate competitions. The confrontation with Connor becomes inevitable when he brutally attacks Li, forcing him into a corner where his mother assigns him a tutor named Alan, with whom Li eventually forms a friendship.
An encounter with Connor leads Li to a rematch. He tries to use a flying kick, a maneuver learned from his deceased brother, but Connor's strength overpowers him, leaving Li defeated once more. In a twist of fate, Li observes Victor being attacked by thugs working for his creditor, O'Shea, who also operates Connor's dojo. Driven by a sense of duty, Li steps in to defend Victor, earning his gratitude and an opportunity to train Victor, who aspires to make a boxing comeback to clear his debts and save his pizzeria.
Despite his reservations, Li takes on the role of Victor's employee at the pizzeria. During a critical match, Victor suffers severe defeat due to O'Shea's underhanded tactics, which sends him to the hospital where Li's mother is a physician. Haunted by memories of his brother's demise, Li finds himself incapacitated and unable to act, disappointing Mia in the process.
After avoiding communications from Mr. Han, Li's mentor finally visits New York. Mr. Han learns about Li's struggles and encourages him to compete in the Five Boroughs Tournament to confront his demons and aid his friends. Mr. Han reaches out to Daniel LaRusso, who had a history with Mr. Miyagi and is inspired by Daniel's journey. Though initially reluctant, Daniel agrees to assist.
Under the guidance of Mr. Han and Daniel, who mentors him in Miyagi-do karate, Li's training intensifies. He spends time with Alan, whose rooftop garden serves as an unconventional training space. Together, they work on a revamped version of Li's brother's fabled flying kick—this time, involving a clever feint to outsmart opponents. After numerous attempts and moments of frustration, Li finally masters this crucial technique.
The tournament finals are set on a rooftop, where tension mounts as Li and Connor face off in an electrifying match. As the score stands tied at seven, Li executes the newly refined flying kick, striking Connor decisively and claiming victory while overcoming his own fears in the process.
In the aftermath, Victor embarks on a new venture by opening a second pizzeria with Mia while Mr. Han returns to China. As a token of gratitude, Li sends a pizza to Los Angeles, where Daniel shares a slice with Johnny Lawrence. Their light-hearted exchange ends with Johnny joking about the superiority of West Coast pizza, leading him to pitch a quirky idea for a dojo-themed pizzeria called Miyagi-Dough, which greatly amuses and perplexes Daniel.
