When a scientists daughter is kidnapped, American Ninja (David Bradley), attempts to find her, but this time he teams up with a youngster he has trained in the ways of the ninja.
Hiro (Lee Reyes), Master Tetsu's (Pat Morita)'s grandnephew, is the last of the true Ninja. His granduncle sends him to apprentice under Joe Kastle (David Bradley), who is the American Ninja, to gain experience. Tetsu is going out of town and wants Joe to look after the house and Hiro in his absence. Hiro's mother died during childbirth and his father was killed a few years later. Tetsu is his only living relative, and without Tetsu, Hiro would be bounced around in the foster home system, without any stable home and family. Hiro is 12 years old.Hiro cares only for his Game Gear and has little interest in the ways of the Ninja. Joe in addition to being the American Ninja also owns a boat where he lives.
In order to meet the American Ninja, Lisa (Anne Dupont) "varnishes" his boat when in fact she was given an order to "tarnish" the brass on the boat. Lisa says that she worked on a boat next to Joe's for 2 weeks and he never noticed her.Since the varnish will take 2 days to dry, Lisa invites Joe to stay on the extra bunk on her boat.
It is revealed that Lisa is the daughter of a scientist Dr Strobel (Aharon Ipale), under the employ of Glock. Glock is the owner of Glock Chemicals and is a rich industrialist.Strobel has just developed a pesticide ZB12, that works in seconds and that does not leave any residues. Strobel is proud of his work that helps humans to better their lives. Strobel observes that Glock is working with General Zubino (Alfredo Sandoval).Dr Strobel is forced to develop a nerve gas for a Latin American despot General Zubino. Zubino wants delivery of the nerve gas in 2 days, or he threatens to use his army to annihilate Glock's businesses in Venezuela.In high concentrations, ZB12 destroys the nervous systems of humans and Glock wants Strobel to create a nerve gas bomb to be delivered to Zubino.When Lisa's dad refused to cooperate, Glock orders the kidnapping of Lisa, so that he can force her dad to complete the development & testing of the nerve gas agent.
Glock summons Viper to kidnap Lisa. Viper is a mysterious Ninja that disappears and reappears with a puff of smoke.Joe takes Hiro to dinner with him to Lisa's boat. While having dinner Lisa is kidnapped by Viper (James Lew) and a host of multi-colored Ninjas, and so the American Ninja and Hiro sneak onto a plane to Venezuela to save her.They basically sneak into the plane that Viper is using to transport Lisa to Venezuela to Glock (Clement Von Franckenstein).
Lisa is presented to Dr Strobel and threatened to complete the nerve gas bomb. Strobel tells Lisa that he will sabotage the bomb, so it backfires when it is tested. But that will lead to the death of Dr Strobel as well.
Joe & Hiro are discovered getting off the plane & are promptly arrested by the local police. Although Hiro is able to escape, while Joe is put in locker. Hiro meets Joe by the window of his holding cell and Joe tells him to get help from the American embassy. The Embassy tells Hiro that Joe is being charged with espionage, and that securing his release will take a lot of time.Glock decides to get Joe eliminated. He orders Viper to attack the convoy which is taking Joe to prison.Before Viper can attack, Hiro hijacks the convoy (he follows the convoy in a stolen bicycle) & rescues Joe. Joe then meets Viper's attack head-on. Ninja fighting ensues where the Ninjas try to lure Joe into traps by getting him to follow the abducted Hiro. Joe manages to rescue Hiro and defeat the Ninjas. Viper's goons shoot at Joe, who dives in to the water to escape.But Hiro thinks Joe has been shot dead and tries to get to the American Embassy. Meanwhile, Joe doesn't want to fail Tetsu by losing Hiro, who was left in his care. Joe & Hiro reunite on the streets of Venezuela, when Hiro gets in trouble with some local thugs led by the man from whom Hiro stole the bicycle.
Before the American Ninja and Hiro can rescue Lisa and her father from "Viper", the American Ninja must reawaken the ancient Ninja tradition within Hiro with a 5-minute training montage.
After the training, Hiro & Joe break into Glock's facility & rescue Lisa. Lisa, Hiro and Joe then head to the chemicals facility where Lisa's father has been held captive to work on the nerve gas bomb. Lisa's dad tries to sabotage the bomb, so that it kills everyone in the facility, but Glock catches him. Glock then imprisons Lisa's dad & rigs a nerve bomb to blow up in his face instead.
Viper is defeated in a climactic battle scene. Joe & Hiro reach Lisa's dad just when the nerve gas is released & manage to free him & trap Glock instead. Glock dies from the nerve gas attack. Joe returns to Los Angeles to kiss Lisa on the bow of his boat.
