Plot Summary: [Wikipedia]
Part II begins where the first movie left off. After the tournament, Daniel and Mr. Miyagi are heading toward Miyagi's truck, when they notice John Kreese (Martin Kove) violently scolding his best student (Daniel's former rival) Johnny for finishing second in the tournament. Kreese shatters Johnny's trophy and begins strangling the youth. Fellow Cobra Kai students Bobby, Dutch, Jimmy, and Tommy rush to Johnny's defense, but Kreese swats them away. Miyagi intervenes, demanding that Kreese let Johnny go. When Kreese refuses, Miyagi breaks the chokehold, and the two senseis have a short brawl, in which Miyagi does little more than dodge Kreese's blows and finally humiliates him by tweaking his nose instead of delivering a final, deadly blow. (It was later revealed, in The Karate Kid, Part III, that Johnny, Bobby, Jimmy, Dutch, and Tommy all cease to be Kreese's students as a result of this behavior.) Miyagi explains to his protégé Daniel that "for those with no forgiveness in their hearts, living is an even worse punishment than death."
Six months later, Miyagi (having finally caught a fly with a pair of chopsticks, as he has long attempted to do) is interrupted by Daniel, who is fuming about his damaged car, his mom's transfer to Fresno, and the ruin of his courtship with schoolmate Ali (Elisabeth Shue), who dumped him for a football player at UCLA. After easily fixing the car's engine, Miyagi takes Daniel to the backyard and restores the boy's focus by having him build a new wing for Miyagi's house. It is revealed that Daniel is building a guest room for himself, Miyagi having arranged for the boy to live with him while his mother goes to Fresno.
Unfortunately, Miyagi receives a letter from Okinawa, telling him his father is very ill. Miyagi intends to return to Japan alone, but Daniel uses part of his college savings to accompany him. Arriving in Okinawa, they are confronted by Miyagi's old enemy, Sato (Danny Kamekona). They were once best friends, having both studied karate under Miyagi's father, but they became rivals in a love triangle involving a woman named Yukie (Nobu McCarthy). Miyagi fled Okinawa to avoid a fight to the death with Sato.
Miyagi and Daniel are welcomed to Tome village (which is now adjacent to Kadena Air Base) by Yukie and her niece Kumiko (Tamlyn Tomita). There they learn that Sato is now a rich industrialist, whose supertrawlers have decimated the local fish population. The village's economy now depends on farming. The denizens lease their farmland from Sato's corporation, which owns the entire property. Sato's nephew Chozen (Yuji Okumoto) is even worse, regularly cheating the farmers with hollow weights while measuring and buying their crops for market.
On the street, Sato confronts Miyagi and is about to attack him when Yukie runs to them, crying that Miyagi's father is dying and wants to see both his students. Just before passing away, the father pleads for them to put aside their feud and make peace. Miyagi is willing to do this, but Sato is belligerent. Out of respect for their mutual sensei, he gives Miyagi three days to mourn before confronting him again.
Miyagi and Yukie rekindle their old bond, while Daniel flirts with Kumiko and has her teach him about Japanese culture. Daniel also learns a new style of karate, one even more difficult than the "Crane Technique" of the first film: the "Drum Technique." In this way, Daniel and Kumiko develop an ever-growing bond and liking for each other.
Daniel is repeatedly hounded by Chozen and his two equally nasty friends. They beat Daniel up in front of Kumiko after he tries to stop Chozen from cheating the villagers. The next day, in a bar, Chozen's gang forces Daniel to break multiple slabs of ice for a bet. Although no one has ever broken six slabs with a single strike, Miyagi bets a large sum of money that Daniel can perform the feat. Thanks to Miyagi's breathe-and-focus exercises, Daniel succeeds, regaining his college-tuition money. That evening, Chozen tries to steal Daniel's wallet, but Daniel thwarts him. Later that night, a spear-wielding Chozen and his cronies gang up on Daniel. Miyagi comes to the rescue, but not before the thugs ransack the Miyagi family dojo.
The next day, Miyagi decides that now is time for him and Daniel to go back home. Yukie wants to go with him. Meanwhile, Daniel tries to encourage Kumiko to come to America. They are all interrupted by a group of bulldozers sent by Sato, who threatens to destroy the village if Miyagi refuses to fight him to the death. Miyagi agrees to fight on one condition: that the deed to the entire property will no longer be leased, but donated, to the farmers.
Daniel pleads with Miyagi to forget about the "honor garbage," but Miyagi says it is about the survival of the village, and that even if he dies, he will win because the village will be safe forever. That evening, a typhoon springs up. As Daniel, Miyagi, Kumiko, and Yukie help villagers get into a shelter, they see Sato's dojo collapse. They find Sato trapped underneath a large support beam from the dojo. Miyagi rescues him by breaking it in two with a shuto (sword hand) strike (effectively answering Daniel's question from the airport concerning a picture of Sato breaking a large wood log and whether or not Mr. Miyagi could "break a log like that". Subsequently, Mr. Miyagi answers, "Don't know. Never been attack by tree"). Sato is taken to safety while Daniel attempts to rescue a little girl on the bell tower. During Daniel's return to the storm shelter, he falters with the young girl on his back. Sato tells Chozen to help Daniel, but Chozen's cowardice starts to show - he refuses, retreating and cowering among the other villagers. Ashamed at his nephew's cowardly behavior, Sato renounces Chozen, prompting Chozen to run out into the storm.
The next day, Sato arrives unannounced to rebuild the village, along with the deed to the village, admitting that his years of hate have been wrong and asking for forgiveness. Miyagi, accepts the deed and establishes peace with Sato. Taking this opportunity, Daniel requests that the traditional o-Bon dance be held in the traditional place of the castle of King Shohashi. Sato agrees, stating that the dance will be held there "now and forever". At the dance, Chozen suddenly appears, takes Kumiko hostage with a balisong, and challenges Daniel to a duel. Before Daniel approaches Chozen, Miyagi reminds him that "This not tournament, this for real." They fight on a platform surrounded by water. At first, Chozen holds the upper hand, even blocking Daniel's Crane Kick. Both combatants wallop each other almost to a pulp, and everybody can see that unless Daniel puts a quick end to the battle, there will be no winner. Accordingly, Miyagi reveals a small, man-shaped drum, which is decorated with two weighted strings resembling arms and fists. As Miyagi twists this drum, Sato and Yuki follow suit, as do many other villagers. Daniel gets the message, using the Drum Technique to defeat Chozen. Chozen opts for a death blow from Daniel, who instead tweaks his nose, just as Miyagi did with Kreese in California. Daniel and Kumiko embrace triumphantly, while Miyagi, Sato, Yukie, and the rest of the villagers applaud them from the castle walls.
