Alexander Grady, a widower and father of a five-year-old son is chosen to represent the United States of America in an international martial arts tournament against Team Korea. Once a rising star in the martial arts world, he suffered a shoulder injury that forced him into retirement. Also chosen for the team are Tommy Lee, a skilled fighter and martial arts instructor, Travis Brickley, an extremely brash fighter with a short fuse; Virgil Keller, a devout Buddhism; and Sonny Grasso, a streetwise fighter from Detroit, Michigan.
After returning home from South Korea, three members of the U.S. National Karate Team set up a martial arts studio in Las Vegas. Travis has been secretly competing at "The Coliseum", a brutal underground fighting arena run by Weldon, whose protégé Brakus is the owner and undefeated champion. Ordinarily a challenger must defeat three of its "Gladiators" in order to face Brakus, but Travis challenges Brakus outright. Amused by Travis's arrogance, Weldon grants his wish.
The film opens in the small town of "Liberty", where a vicious group of neo-Nazis have been terrorizing the populace, most recently having murdered an African-American pastor and set fire to his church. While visiting his sister and brother-in-law in Liberty, Tommy Lee (Phillip Rhee) crosses paths with the group's leader Donnie Hansen (Mark Rolston), and is drawn into the conflict when his sister is attacked in their car. Later, the group attempts to harass a schoolteacher named Margo (Gina Gershon) at the local 4-H fair, but Tommy intervenes and fends them off. Ungrateful at first, she eventually warms up to Tommy when they are set up on a blind date, and they start a relationship.
A group of Russian mobsters have stolen a huge supply of paper for printing U.S. currency, and are now flooding the market with counterfeit bills. When one of the mobsters decides to turn herself in and hand over a data CD to the DA, she is shot and killed, but not before handing the disc to an unsuspecting Tommy Lee. Despite working with the police as a martial arts instructor, Lee doesn't go to the cops with the disc, but instead goes on the run, giving the mafia time to kidnap his daughter to hold as a hostage in exchange for the disc. When Lee catches the mobsters fleeing in a C130, he raises himself on a fire engine and casts the mobster's own bomb into the plane as landing gear doors close.