In the year 2011, the prison system is run by the private sector. Business tycoon R.D. Crowley (Robert Davi) has created a Virtual Reality prison. The prisoner's bodies are locked in suspended animation while their mind traverses the lethal labyrinth of games Crowley has designed for them. Crowley allows wealthy sportsmen to participate, for a price, in deadly VR combat with the prisoners.

After studying martial arts in the Philippines and defeating his opponent Quino, Anthony Scott heads back to the U.S. to attend college. Making the promise to his teacher that he will not fight, Anthony finds himself the target of the Tigers, a local martial arts gang led by bully Dick. When Dick constantly attempts to fight Anthony, Anthony refuses. However, Anthony will fight under the condition that it will be a fair fight. When Dick resorts to dirty tactics, Anthony uses his special move, The Dragon Strike, to defeat Dick. Upset at his loss, Dick decides to get even through the Tigers' real leader, Mark Sanders.