In 2018, Johnny Lawrence lives in dreams of the past and how his life was great until Daniel LaRusso beat him in a karate tournament. Now Daniel owns a successful auto group and Johnny gets by on menial jobs. But things change when Johnny sees a teenage boy beat up on by bullies.

Johnny starts Miguel's training in earnest while beginning an online promotion of his dojo. Meanwhile, Daniel volunteers to chaperone the school Halloween dance to keep an eye on Samantha but comes face-to-face with a skeleton from his past.