Shortly after the All-Valley Karate Tournament, sensei John Kreese becomes furious and attacks Johnny in the parking lot. Miyagi confronts Kreese and passively immobilizes him. Miyagi threatens to strike a deadly blow but instead comically tweaks Kreese's nose and walks away.
Six months later, Miyagi receives a letter, notifying him that his father is dying. He plans to return to his home village in Okinawa, and Daniel accompanies him. Miyagi tells Daniel about why he left Okinawa many years ago. He fell in love with a woman named Yukie, who was arranged to marry his best friend Sato, son of the richest man in the village and fellow karate student of his father. Upon announcing his intentions to marry Yukie, Sato challenged him to a fight to the death. Rather than fight, however, Miyagi left the country.
In Okinawa, Miyagi and Daniel are greeted by Chozen Toguchi, who drives Miyagi and Daniel to one of Sato's warehouses, where he reveals he is Sato's nephew. Sato appears and demands to fight Miyagi, who adamantly refuses. Arriving at the village, Miyagi and Daniel are welcomed by Yukie and her niece Kumiko. They discover that Sato has become a rich industrialist whose supertrawlers have destroyed the local fish population impoverishing the other villagers. They are forced to rent property from Sato, who owns the village's land title. Yukie reveals that she never married Sato, because of her love for Miyagi. After Miyagi's father dies, Sato gives him three days to mourn out of respect before their fight. Miyagi shows Daniel the secret to his family's karate – a handheld drum that twists back and forth illustrating the "drum technique", a block-and-defense karate move that Daniel begins to practice.
Daniel accidentally exposes corruption in Chozen's grocery business during an encounter in the village. Chozen later accuses Daniel of insulting his honor, and they have a series of confrontations. Their feud comes to a head when Chozen and his friends attack Daniel and vandalize Miyagi's family property. The group is quickly defeated and runs off after Miyagi arrives. Miyagi and Daniel plan to return home before the situation gets worse, however Sato shows up with bulldozers and threatens to destroy the village if Miyagi refuses to fight. Forced to comply, Miyagi gives in on the condition that Sato signs the village's land title over to the villagers regardless of the fight's outcome. Sato initially balks, but agrees after Miyagi describes the condition as a "small price" to pay for honor.
On the day of the fight, a typhoon appears. Villagers take cover at a nearby shelter, but Sato becomes trapped when his family's dojo is leveled by the storm. Miyagi and Daniel rush to rescue him. Arriving at the shelter, Daniel attempts to rescue a child trapped in a nearby bell tower. Sato orders Chozen to help, but when he refuses, Sato rushes to assist Daniel himself. He disowns his nephew for refusing to cooperate, and an enraged Chozen runs off into the storm in disgrace. The next morning, as the villagers are rebuilding, Sato returns with his bulldozers – only this time to help rebuild. Sato hands over the land title to the village and asks for Miyagi's forgiveness. Miyagi gladly accepts. Daniel and Kumiko approach Sato about hosting the upcoming O-bon festival in a nearby ceremonial castle, and he accepts.
While Kumiko is performing a dance at the festival, a now-vengeful Chozen ziplines into the presentation, taking her hostage and demanding to fight Daniel alone. Daniel fights well, but is eventually overwhelmed by Chozen who gains the upper hand. Miyagi, Sato and the crowd respond by twisting handheld drums they brought to the celebration, inspiring Daniel. Chozen, seemingly confused, closes in for the kill, but Daniel is able to deflect Chozen's attacks and land counter-attacks using the drum technique. Daniel grabs the vanquished Chozen, raising his hand and threatening to end Chozen's life saying, "Live or die, man!" Chozen chooses death, but, reminiscent of the way Miyagi handled Kreese earlier, Daniel tweaks Chozen's nose and playfully drops him to the ground. Daniel embraces Kumiko, while Miyagi looks on proudly.Ralph Macchio as Daniel LaRusso
Pat Morita as Kesuke Miyagi (宮城健介, Miyagi Kesuke)
Nobu McCarthy as Yukie (ゆきえ)
Tamlyn Tomita as Kumiko (久美子)
Yuji Okumoto as Chozen Toguchi (渡口朝鮮, Toguchi Chōsen)
Joey Miyashima as Toshio (利夫)
Marc Hayashi as Taro (太郎, Tarō)
Danny Kamekona as Sato (佐藤, Satō)
Tony O'Dell as Jimmy
Martin Kove as John Kreese
William Zabka as Johnny Lawrence
Other notable cast appearances include B. D. Wong (credited as "Bradd Wong") as an Okinawan boy who invites Daniel and Kumiko to a dance club and Clarence Gilyard as one of the participants in the ice-breaking scene.
The opening scene takes place immediately following the finale of the first film to seamlessly tie the two together. It was originally planned as the ending for the first film, although it was not shot until after the second film's production began.
Principal photography took place in Oahu, Hawaii, in the northeastern area of the island known as the "windward side". The local countryside in modern-day Okinawa had been drastically changed due to the presence of military bases, so other locations in both Japan and Hawaii were scouted as alternative filming locations. Filmmakers selected a property in Oahu that was privately owned by a retired local physician who agreed to allow a portion of the land to be used in the film. To form the Okinawan village portrayed in the film, seven authentic replicas of Okinawan houses were constructed along with more than three acres of planted crops. 50 Okinawa-born Hawaii residents were also recruited as film extras. Filming began on September 23, 1985.
The musical score for The Karate Kid Part II was composed by Bill Conti, who wrote the score for the previous installment. The film's signature tune was Peter Cetera's song "Glory of Love", which was a No. 1 hit in the U.S. and received an Academy Award nomination for Best Song. When Daniel and Miyagi are being driven by Chozen and his friend Toshio after they arrive in Okinawa, Chozen tunes in the radio of the car until he reaches a station playing "Fascination", the same song to which Ali and Johnny were slow dancing at the high-end country club in the original film. The soundtrack is notable as being the final album released by United Artists Records.
- "Glory of Love" (Peter Cetera)
- "Rock 'n' Roll Over You" (The Moody Blues)
- "Fish for Life" (Mancrab)
- "Rock Around the Clock" (Paul Rodgers)
- "Let Me at 'Em" (Southside Johnny)
- "This is the Time" (Dennis DeYoung)
- "Earth Angel" (New Edition)
- "Love Theme from The Karate Kid Part II" (Bill Conti)
- "Two Looking at One" (Carly Simon)
- "The Storm" (Bill Conti)
The score, which features 20 tracks, was released separately on CD by Varèse Sarabande in a box set in 2007 and 2012.
The Karate Kid Part II opened in 1,323 theaters across North America on June 20, 1986. In its opening weekend, the film ranked first in its domestic box office grossing $12,652,336 with an average of $9,563 per theater. The film earned $20,014,510 in its opening week and ended its run earning a total of $115,103,979 domestically.
The film has a 43% rating out of 23 reviews on Rotten Tomatoes. Movie-gazette.com gave the film a positive review, stating the film was a "worthy follow-up to the first Karate Kid film, with added interest provided by its exotic locations and characters." The Los Angeles Times also gave the film a positive review, particularly praising Pat Morita's performance as Miyagi and calling the actor "the heart of the movie". However, while picture historian Leonard Maltin agreed with the strength of the performances, he called the film "Purposeless... corny in the extreme — all that's missing from the climax is hounds and ice floes — but made palatable by winning performances. Best for kids." At the Movies gave the film a mixed review, with both critics praising the Miyagi character but criticizing the villains and action scenes. Roger Ebert recommended the movie overall but Gene Siskel did not.
At the 1987 ASCAP Awards, Bill Conti won Top Box Office Films for the original music, which was released on United Artists Records. It also received a different Academy Award nomination for Best Original Song for "Glory of Love".
A video game adaptation titled The Karate Kid Part II: The Computer Game was released in 1986 by publisher Microdeal on Atari ST and Amiga. It is a fighting game similar to The Way of the Exploding Fist in which the user plays the role of Daniel in five fights based on movie scenes. There are also two mini games with digitized images from the movie: Miyagi catching flies with chopsticks and Daniel breaking an ice block.
In 1987, The Karate Kid for the Nintendo Entertainment System came out; where Stages 2-4 of the game are based on The Karate Kid Part II. As well as two bonus games, where the gamer must try to get Daniel to break up to six ice blocks. And the drum technique exercise shown in the movie, where the gamer tries to dodge the swinging ax as many times as they can.