Twelve-year-old Dre Parker could have been the most popular kid in Detroit, but his mother's latest career move has landed him in China. Dre immediately falls for his classmate Mei Ying but the cultural differences make such a friendship impossible. Even worse, Dre's feelings make him an enemy of the class bully, Cheng. With no friends in a strange land, Dre has nowhere to turn but maintenance man Mr. Han, who is a kung fu master. As Han teaches Dre that kung fu is not about punches and parries, but maturity and calm, Dre realizes that facing down the bullies will be the fight of his life.

Daniel LaRusso moves to Los Angeles with his mother, Lucille, and soon strikes up a relationship with Ali. He quickly finds himself the target of bullying by a group of high school students, 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.

At Adams College, the jocks rule the school from their house on high, the Alpha Beta fraternity. So when a group of socially-challenged misfits try to go Greek, they're instantly rejected by every house on campus. Deciding to start their own fraternity to protect their outcast brothers, the campus nerds soon find themselves in a battle royale as the Alpha Betas try to crush their new rivals.

The nerds are now in control of the university, as a result of Lewis Skolnick and the rest's actions in the two previous movies. A new generation of sportsmen arrive, however, determined on winning the school back. The principle, himself an ex-nerd fighter, helps them, and the nerds return to suppression. Harold Skolnick needs help from his uncle Lewis, the hero of the first two movies. Lewis, however, are not too proud of his nerd past, and won't reveal any of it, much less help his nephew. However, his wife makes him change his mind, and with help from his friends from the first two movies, they start the fight to win the school back, using classic nerd tricks.