Based on supposedly real-life events which took place between 1975 and 1980–1981, Bloodsport tells the story of an American man named Frank W. Dux (Jean Claude Van Damme), who was trained from his youth in the ways of Ninjutsu by a Japanese master of the art, Senzo Tanaka (Roy Chiao). Primarily to honor his mentor out of gratitude and respect for having been allowed the training in place of Senzo Tanaka's deceased and only son, Dux leaves for Hong Kong to participate in the Kumite — an illegal and underground, freestyle, single-elimination and occasionally deadly full-contact martial arts tournament to which the world's best martial artists are clandestinely invited every five years.
The movie begins with the preparation of the Kumite somewhere in Kowloon Walled City. Then it shows a number of fighters preparing for the Kumite with their own training regimens (from climbing trees to bash coconuts to breaking big ice blocks and boards). Then it shows a man cleaning a platform when it finally shows Frank Dux kicking a speed bag in an Army gym. An officer talks to him about how the commanding officer found out about Frank leaving for the Kumite in Hong Kong and wanted to talk to him. Frank tells that he would take a shower and talk to him only to go AWOL from there.
Dux goes to the Tanakas' house to say goodbye to his trainer and remembers back to his training days. A flashback sequence shows a younger Frank Dux being goaded by two schoolmates to steal a sword in Mr. Tanaka's house. As Mr. Tanaka and his son Shingo catches Dux in the act, the other schoolmates run away, leaving Dux to be the fall guy. Dux explains that he was not stealing, but trying to put the sword back in its rightful place. Tanaka tells Dux that the sword cannot be stolen and it must be earned. Tanaka uses the sword and cuts off the front of Dux's cap, who doesn't flinch during the ordeal. Impressed by his "fighting spirit," Tanaka makes a deal where he will train Dux in exchange for not calling the police on him. Despite being used for a "punching bag" by Shingo during training (at one point Shingo disrespects Dux by calling him a "round-eye"), Dux saves Shingo from two bullies at school. Shingo confides in Dux that one day he would make his father proud by going to the Kumite. Shingo dies years later, and despite initial resistance to the idea, Tanaka agrees to train Dux as a member of the Tanaka Clan.
Back in the United States, two military law enforcement agents (Air Force Criminal Investigation Division) (Norman Burton and Forest Whitaker) are sent to track down and arrest him.
After arriving in Hong Kong, Dux befriends fellow American contestant, vale tudo fighter Ray Jackson (Donald Gibb) and Victor Lin (Ken Siu), the latter of which acts as a manager/liason for Dux and Jackson. Lin explains that the tournament is "anything goes," and that there are three ways to win:
- Knock your opponent unconscious;
- The opponent submits and shouts "matte;" or
- The opponent is thrown out of the fighting area.
Dux eventually becomes involved with a female American journalist, Janice Kent (Leah Ayres), who is attempting to investigate the secretive Kumite event. Dux believes the Kumite is for the fighters, and not for the people who read newspapers. As the tournament progresses, Dux beats all of his diverse opponents, including a Sadiq Hossein (Bernard Mariano), Paco (Paulo Tocha), and Pumola (David Ho). He advances to the third and final day of the tournament to face the defending Kumite champion, Chong Li (Bolo Yeung) — a man with the tendency to cripple and sometimes outright kill his opponents on the platform, and who has also hospitalized Ray Jackson during the second day of the Kumite. When Chong finds that Dux is the better fighter, he blinds Dux with a handful of quicklime, but Dux manages to train his senses and makes Chong Li shout "matte" to become the first Western winner of the Kumite, defeating 511 other competitors. The film closes with Dux returning to the United States and statistics detailing the real-life Frank W. Dux's alleged achievements (such as the fastest KO) are shown.