Six months after the events of the film, Big Stan has been transferred to the Oaksburgh State Penitentiary. He quickly battles the other violent leaders of his old gangs and wins, being revered by the other inmates and bring tranquility to their prison yard. Eventually he gains respect from another inmate who trains him in climbing skills, and they form a partnership. Meanwhile, Stan becomes a much-feared criminal and is locked away in a cell for twenty years.
When his trial begins, Stan finds himself battling the warden consistently and winning. But as his case progresses, his respect for the guards gradually wanes, until he is reduced to begging to be spared. When the other inmates begin to respect him again, he is set free. But he returns to the prison to resume his crime again, only this time using his martial arts skills to win. Eventually he gets even more respect, until he defeats the warden once and for all.
The plot of the film centers on a big, strong, and wise-looking guru known as Big Stan. He mentors young boys to learn the ways of the warrior. At one point, the big, strong guru teaches young Stan the true method of Kung-fu, which involves being patient, taking it easy, and knowing how to defend oneself. However, due to a lack of discipline, the youth beats a girl to death. Stan then uses his knowledge and abilities to train the boy, eventually making him the pride of his school. In order to get close to the boy, he ties him to a big, sturdy tree, but accidentally frees him when a fire suddenly breaks out in the prison yard.
Years later, a real estate con artist named David Carradine arrives at the prison to help teach the son of a gang leader. After some initial trouble, Carradine is able to persuade the gangster to let go of his pregnant wife and agree to let him marry her. Shortly thereafter, Stan helps David escape from the prison and David becomes a disciple of Big Stan. In return, Stan teaches the real estate con artist some martial arts tricks, such as what the name “speed reading” really means. As the relationship between David and Stan grows, David finds himself drawn into the world of martial arts and begins training with the late Big Stan.
At one point, Gasque’s character suddenly falls ill and is hospitalized. Apparently, he contracted some sort of virus that affected his heart and kidneys, which caused him to have an enlarged heart and difficulty breathing, but he is still confident that he can overcome this. When he finds out that his friend, big stan, is having a martial arts tournament in New York, Gasque contacts him and asks him if he can help him out.
Naturally, Gasque is eager to help Stan, but first wants to get away from his life of crime. He tells David that he has a girlfriend, named Beth, who would appreciate if he would help her with her plans for the future. David agrees to help, but first wants to tell Stan how he fell under the spell of the guru known as Minton. This would help him put things back into perspective, believing he has finally found true love.
Unfortunately, Stan’s affliction is too much for the walls, which force him to meet his fellow inmates again and plead with them for help. Although the fellow inmates are helpful, they are unwilling to turn over one of their own in order to save someone else. Meanwhile, Beth gets herself put in the electric chair and David, desperate to help, ties her to a post in the prison yard. Later, while she is being tortured, Stan realizes what he is doing, and flees, but not before placing a bullet in Beth’s brain.
When Stan returns to the prison, he is arrested alongside several other escaped convicts, including Deuce Bigalow. After spending several months in jail, he is given the chance to fight as a gladiator in the ring. However, he proves to be no match for the formidable Bigalow, and is beaten badly. With help from his martial arts master, David Carradine, Stan escapes, but not before having a final encounter with Bigalow. In the end, David wins, but not before Bigalow gives Stan a lesson on patience and self-control…