Johnny, Ernie Reyes Jr. and his brother Adam, Nicolas Cowan, are teenage surfers living in Los Angeles with their father, Mac, John Karlen. Two weeks before Johnny's 16th birthday, ninjas strike, and a mysterious warrior with an eye patch named Zatch, Ernie Reyes Sr., thwarts the attack. A second assault ends with Mac kidnapped, though Zatch manages to shield the teenagers and their friend Iggy, Rob Schneider.
Adam discovers that the video game on his Game Gear mirrors the events around him, and he realizes he can influence some outcomes through his Sega. Zatch reveals that they are the sons of the king of Patusan, whose land and monarchy were overthrown by the evil Colonel Chi when they were young. Zatch claims it is their destiny to return to Patusan, overthrow Colonel Chi, and free the people. He leads them to the East Asian district of Little Patusan in Los Angeles, where Johnny is introduced to a Patusani princess, Ro-May, Kelly Hu, who has been betrothed to Johnny since infancy.
Ninjas attack again, but Johnny's abilities as a warrior prince emerge and he defeats several foes. Johnny, Adam, Iggy, Zatch, and Ro-May decide to return to Patusan. They are followed by a Los Angeles detective, Lieutenant Spence, Tone Loc, who has been investigating the ninja assaults. They reach Patusan and discover what Colonel Chi's rule has wrought, including a burned village and a chain gang of political prisoners. Spotted by the guards, Johnny and Adam defeat them and free the villagers.
Zatch leads the crew to a hidden cave in which the ancient weapons of the Patusani monarchy are preserved. Zatch arms Johnny and trains him for future challenges. Johnny is beaten repeatedly, but he is finally able to disarm Zatch. Rallying the villagers, they travel to the coast, opposite from an island that houses the royal city and Colonel Chi's dungeon. Unable to go by boat due to an impassable reef, Johnny and Adam tell the Patusanis to craft surfboards. They then paddle and surf to the unguarded side of the island.
Landing on the island, Johnny and Zatch lead the attack on the royal city, taking down Chi's henchmen and freeing Mac. During the battle, Zatch is revealed to be the boys' paternal uncle. Johnny confronts Colonel Chi, successfully defeating him by knocking him into a body of water with the help of Adam and his Game Gear. With Chi's rule undone, peace is restored to Patusan. Johnny is seated as the heralded warrior prince with Ro-May as his princess and Adam as a prince. Johnny declares the monarchy dissolved and announces that Patusan will operate as a democracy, a choice rooted in the belief that true freedom comes from shared power and the people’s ability to choose their path.
