Daniel accompanies his mentor to Okinawa who is off to see his dying father and confront his old rival, while Daniel inadvertently makes an enemy of his own.

Miyagi: Daniel-san, never put passion before principle. Even if win, you lose.
Daniel: Doesn't that bother you?
Miyagi: Why should it?
Daniel: Well the people may believe it's true or something.
Miyagi: Daniel-san, lie become truth only if person wanna believe it.
Daniel: Is that another old okinawan saying?
Miyagi: No. New Okinawa saying.
Daniel: How new?
Miyagi: hmmmm...
Miyagi: [pauses, pretending to think]
Miyagi: 'bout ten second
Daniel: You could've killed him, couldn't you?
Mr. Miyagi: Hai.
Daniel: Well, why didn't you then?
Mr. Miyagi: Because, Daniel-san, for person with no forgiveness in heart, living even worse punishment than death.
[Walking through the Okinawa airport, Daniel and Miyagi find a poster advertising Sato's karate school. The poster shows Sato breaking a log with his bare hands]
Daniel: Hey can you break a log like that?
Miyagi: Don't know. Never been attacked by tree.
Miyagi's father: [upon seeing his son again after so many years] If I am dreaming, let me never awaken. If I am awake, let me never sleep.
Mr. Miyagi: Remember, best block, no be there.
[at the cannery. Daniel has ripped his shirt, and almost gotten himself killed, while perfecting Miyagi's "Swinging Drum" maneuver]
Mr. Miyagi: Daniel-san, you all right?
Daniel: Yeah... I'm sorry; that was pretty stupid, wasn't it?
Mr. Miyagi: [with a grim smile] Miyagi say that to father when same thing happen. Father agree, was stupid. Father was right.
[Miyagi is sitting by himself near the beach after his father's funeral; Daniel comes and sits with him]
Daniel: You know... When MY father died, I spent a lot of time thinking I hadn't been such a great son. It seemed to me like I could have listened to him a little more, spent a little more time with him... I felt so guilty, you know, like he did everything for me and I didn't do anything for him. Then one day it occurred to me... that I did the greatest thing of all for him just before he died: I was there with him, and I held his hand, and I said goodbye.
[last lines]
[after a big fight]
Daniel: Live or die, man?
Chozen: Die.
Daniel: Wrong.
[honks Chozen's nose]
[the day after Miyagi's father's funeral]
Daniel: I don't get something. If Sato hates you so much, why does he give you time to mourn?
Mr. Miyagi: Because, Daniel-san, Miyagi father was Sato teacher. Deep in heart, Sato still know right from wrong.
Daniel: Then why does he still want to kill you?
Mr. Miyagi: [shrugging] ... Because sometimes, what heart know, head forget.
Daniel: [as Daniel is working to salvage the Miyagi family dojo and bonsai garden - which Chozen and Company ransacked the night before - Miyagi approaches and hands him a scroll. Miyagi has already agreed to fight Sato, who threatened the entire village with sale to a real-estate developer if Miyagi refused] What's this?
Mr. Miyagi: Last will and testament. Yukie get house and deed to village. You get house and pickup back home.
Daniel: No, I don't want the house and the pickup back home, I want you! Can't you call this off?
Mr. Miyagi: Tried everything.
Daniel: Well, can't we just leave? Can't we just forget about the honor garbage?
Mr. Miyagi: Has nothing to do with honor garbage. Has to do with village survival
Daniel: This isn't like three points and you're out. If you lose, I know what happens.
Mr. Miyagi: Oh, but Miyagi already won Daniel-san. No matter what happen, village will be safe forever.
Sato: So coward, you return...
Mr. Miyagi: To settle affairs with father.
Sato: And with me.
Mr. Miyagi: Sato, I won't fight you.
Sato: Then you die as you have lived: a coward. You see your father. THEN YOU SEE ME.
[Chozen, wielding a butterfly knife, has crashed the O-Bon dance and taken Kumiko hostage]
Sato: Chozen, don't do this. I was wrong! HATE IS WRONG! The feud is OVER.
Chozen: [with scorn] I cannot hear you, Uncle. I am dead to you now, remember?
Daniel: Oh no, not again. I'm not looking for trouble.
Chozen: Maybe trouble looking for you.
[showing Daniel around the Miyagi Family Dojo]
Mr. Miyagi: Aha... here are the Two Rules of Miyagi-Ryu Karate. Rule Number One: "Karate for defense only." Rule Number Two: "First learn Rule Number One."
[Kreese breaks both hands after throwing missed punches at Miyagi; Miyagi forces him to his knees and draws back his hand for a death blow to the face]
Mr. Miyagi: [repeating Kreese's words] Mercy is for the weak. We do not train to be merciful here. A man face you, he is enemy. Enemy deserve no mercy.
[He lets out a karate yell and throws the chop, stopping his hand an inch away from Kreese's face. He honks Kreese's nose, then walks away. Kreese collapses]
[first lines]
[after Daniel has won his first tournament]
Daniel: Hey Mr. Miyagi, you know I've been thinking.
Mr. Miyagi: About what, Daniel-San?
Daniel: That we should come up with some kind of strategy.
Mr. Miyagi: For what?
Daniel: My future, my whole tournament career.
Mr. Miyagi: Miyagi already have one.
Daniel: Really? What is it?
Mr. Miyagi: Early retirement.
Johnny: [Kreese and Johnny are arguing in the parking lot after the All-Valley Tournament] Come on, that's not fair! I got second place!
John Kreese: Second place? Second place is no place! You're off the team!
Johnny: That sucks! I did my best!
John Kreese: What?
Johnny: I said I did my best!
John Kreese: You're nothing! You lost! You're a loser!
Johnny: No, YOU'RE the loser, man!
John Kreese: Oh I'm the loser huh?
[grabs trophy from Johnny and breaks it, sending pieces flying]
John Kreese: Now who's the loser?
Johnny: You know, you're really sick man!
John Kreese: [grabs and puts Johnny in choke hold... Bobby runs up but Kreese swats him away] How does second place feel now?
Tommy: Come on, he can't breathe!
Bobby: Sensei, please... you're hurting him! He's sorry, he really is, OK?
Mr. Miyagi: [walking up to Kreese] Let him go.
Tommy: Yeah, Mr. Miyagi's right! Let him go!
[Kreese backhands Tommy]
John Kreese: [hissing] Beat it, slope... or you're NEXT!
Mr. Miyagi: I say, LET HIM GO!
John Kreese: [breaks hold and frees a gasping Johnny... Kreese strikes at Miyagi twice, breaking both hands in the process by slamming his fists through two car windows... Miyagi forces Kreese to his knees]
Mr. Miyagi: "Mercy is for the weak... when man confronts you, he is enemy...
[Kreese is staring fearfully at Miyagi, remembering his own words]
Mr. Miyagi: ...enemy deserve no mercy.
[Growls and brings fist to Kreese's nose, but honks it instead of delivering a fatal blow]
Chozen: Your teacher need a hearing aid. Maybe you need one too.
Daniel: I only hear what's worth listening to.
Chozen: You're little teacher ever teach you how to fight with spear?
Daniel: [scared] No.
Chozen: [tosses him spear] That's too bad. Maybe Miyagi teach you how to be coward instead.
Taro: [to Toshio] Maybe his teacher teaches him to be coward instead.
[laughs]
Toshio: [laughs with Taro]
Kumiko: [after Daniel offers to take Kumiko to America with him] But this is my home.
Daniel: Home is where you hang your hat.
Kumiko: Do you think that I would like America?
Daniel: I think you'd love it.
Kumiko: Do you think that it would love me?
Daniel: Well, I know one part of it that already does.
Daniel: [referring to their o-bon dance] Maybe we should take it on the road!
Kumiko: [confused] But we're on the road.
[Miyagi has finally succeeded in catching a fly with his chopsticks - outside, Daniel drives up in the car Miyagi gave him for his birthday; it is sputtering and the fender is dented]
Mr. Miyagi: Ah, Daniel-san! Must've been some senior prom. What happened?
Daniel: You mean, what DIDN'T happen. First I let Ali borrow this car and she re-designs my fender. And I don't know what she's done to my engine, but that ain't running right either. You know what else she does? She tells me she's fallen in love with some football player from UCLA. Why couldn't she just lie to me or something?
Mr. Miyagi: Things could be worse.
Daniel: Don't worry, they are. Last night, my Mom tells me she got transferred by her company to their new branch... in FRESNO! I can't believe I gotta spend my entire summer vacation in FRESNO!
[Miyagi is examining the car, reaching under its hood]
Daniel: You're not gonna be able to fix that.
[No sooner are the words out of Daniel's mouth than Miyagi twists something around; now the engine runs perfectly]
Daniel: How'd you do that? What'd you do?
Daniel: Mr. Miyagi? Was Sato as good as you in karate?
Mr. Miyagi: We had same teacher.
Daniel: Your father?
Mr. Miyagi: Hai.
Daniel: But I thought your family's karate was only taught from father to son?
Mr. Miyagi: Father make exception.
Daniel: If you and Sato had fought, would your father have been the referee?
Mr. Miyagi: Would've been no referee.
Daniel: Then how do you know who wins?
Mr. Miyagi: The one who dead doesn't.
Sato: Miyagi, I wait long time for this. No tricks tonight, or tomorrow, everything gone. Their homes. Their church. EVERYTHING. GONE
Chozen: You insult my honor again, I'll kill you.
Sato: Your fear make air stink!
[Miyagi has given Daniel a drum toy]
Daniel: This is the secret of your family's karate?
Mr. Miyagi: Hai.
Daniel: I don't get it.
Mr. Miyagi: Practice, you will.
[after Miyagi saves Sato's life in the hurricane, he and Daniel survey the devastated village. Sato's trucks pull up]
Daniel: Hey, what's Sato doing here?
Mr. Miyagi: Don't know.
[Sato gets out, dressed in a foreman's outfit]
Sato: I come help rebuild. Here deed to village.
[bows low]
Sato: Forgive me, I beg of you.
Mr. Miyagi: [claps him on the shoulder] Oh, Sato, nothing to forgive.
[Daniel and Kumiko approach]
Daniel: Mr. Sato? Can I say something? Well, o-bon's coming up, and they can't really have it in the village now...
Sato: What do you ask of me?
Daniel: Well, can they have it in the castle? I mean that's where it really belongs, isn't it?
Sato: [smiles at Miyagi] Your student become my teacher.
[shouts]
Sato: O-bon will be held in castle, now and forever!
[Cheering. Sato and Daniel shake hands]
Sato: One condition: you dance with us. Okay?
Daniel: Okay.
Mr. Miyagi: [puts his hand on theirs] Okay.
Chozen: You dance very nice
[snickers]
Chozen: like geisha!
[Chozen has taken Kumiko hostage and is challenging Daniel to a fight]
Mr. Miyagi: Chozen, you are your uncle's finest student. No disgrace him here.
Chozen: Your student disgrace me. I have been dishonored all because of him.
Daniel: Hey, whatever happened, I apologize!
Chozen: Apology will not give me back my honor.
Daniel: Well, neither will this.
Chozen: In their eyes it will. No more talk. You cross bridge or I kill her.
[Daniel starts to cross the bridge]
Mr. Miyagi: Daniel-San, this not tournament. This for real.
Chozen: His favorite teacher's karate technique... the 'let's go'. You know, geisha also like to sing?
[after Daniel complains about having to spend the summer in Fresno]
Daniel: Hey, what are you building out there?
Mr. Miyagi: Guest room.
Daniel: Are you expecting company?
Mr. Miyagi: Nah, refugee.
Daniel: Refugee? Oh yeah, that's great. From where?
Mr. Miyagi: Fresno.
[after Miyagi's father dies]
Sato: Out of respect for my teacher, I give you three days to mourn. When finish, I come back. You prepare to join him.
Chozen: You keep for your collection. I know, you'll like.
[Daniel is at the airport, trying to talk Miyagi into taking him along to Okinawa]
Daniel: Come on, it'll give me a chance to study Okinawan History... like up close, you know.
Mr. Miyagi: Daniel-san, you never tell Miyagi you study Okinawan History before.
Daniel: Well... I just started.
Daniel: [presenting Miyagi with a rosewood display case, obviously for Miyagi's WW2 medals] I got something for you here... see, it's rosewood. For your medals. I thought it'd be nice to... like, show 'em off or something.
Miyagi: Why, Daniel-san... Thank you for gift. But why show off?
Daniel: Well, you know, winning the Medal of Honor and all... It says something about you. Like, you're brave. And all that stuff.
Miyagi: [puts hand to Daniel's chest] THIS say you brave.
[motions to medal]
Miyagi: This say you LUCKY.
Daniel: Just what did you do to earn this, anyhow?
Miyagi: ...Not important anymore.
Daniel: ...Was it scary for you?
Miyagi: ...Miyagi knees no stop shaking for whole week after.
Daniel: ...Did you have to kill a lot of people or something?
Miyagi: Hai, unfortunately.
Daniel: But they were, like, the enemy... weren't they?
Miyagi: They were also PEOPLE, Danielsan.