After Rocky (Stallone) returns home from his latest triumph, he learns that all of his money has been lost by an unscrupulous financial advisor. To make matters worse, his fight-related injuries force his retirement from the ring. So Rocky, his wife Adrian (Talia Shire) and his son Rocky Jr. (Sage Stallone) move to their old low-rent neighbourhood in South Philadelphia. There Rocky must resolve the deep-rooted resentment held by his son, a bitterness that grows when Rocky trains Tommy Gunn, a young boxer who soon rises to national prominence. When Tommy turns against his mentor and publicly taunts him, Rocky knows he must fight once more.