Po, a lovable and clumsy panda, lives peacefully in the Valley of Peace as the Dragon Warrior. His tranquil life takes an exciting turn when his long-lost biological father, Li Shan, suddenly reappears. Together, they embark on a journey to a secret panda village, hidden away in the mountains, where Po learns about his roots and discovers a vibrant community of pandas. Here, Li Shan aims to teach Po the ways of his ancestors and help him master an ancient technique to unleash his true power.

Meanwhile, an ancient and evil spirit warrior named Kai escapes from the Spirit Realm and begins to steal the chi of kung fu masters across China, turning them into jade zombies under his command. His ultimate goal is to conquer all of China by accumulating unparalleled power. As Po struggles to learn the secrets of his new panda abilities, he must also train the jovial and laid-back villagers to become a cohesive band of kung fu warriors to face the formidable threat posed by Kai. The responsibility of saving not only the Valley of Peace but all of China now rests on Po's shoulders, challenging him to embrace his unique identity and awaken the hero within.