After Co Bao's death during the events of the previous film, John Rambo was left with deep regret over what he wanted to do with his life. Compelled to leave more of an impression on the world and do better things than just killing people, Rambo went to work at a Buddhist Monastery somewhere in Thailand, although it is mostlikely located just outside Thailand's capitol, Bangkok. Rambo would stick fight in his spare time and then give the money to the monks, who needed it more than he did. Rambo also mostlikely did this as a thanks for allowing him to think his life over at their monastery. Rambo thought his life of violence was done for good, but he was still haunted by horrific nightmares as well as an empty feeling inside of him. He knew that he wanted to rid himself of violent impulses but he wasn't able to do it without feeling miserable and that he was unable to find happiness as a pacifist. Colonel Sam Trautman, his only friend and mentor, arrives at the monastery along with a one Robert Griggs, a field officer at the local U.S. Embassy in Bangkok. Griggs and Trautman attempt to persuade Rambo to help out with a shipment of FIM 92-A Stinger missiles to the starving, injured Mujhaideen fighters in Afghanistan, to combat the brutal invading Russian armies. Griggs then shows Rambo graphic photos of the victims of the Soviets. Although Rambo is moved, he cannot bring himself to go back to a life of war and violence. He declines their offer and walks back away to be alone, regretting his decision, knowing that it upset his only friend. Griggs remarks that they have to walk all the way down the Monastery steps but Trautman knows that Rambo is miserable and decides to talk about it with him. Rambo responds to Trautman that he likes "belonging to something", but Trautman tells him that he doesn't really belong to the monastery, and proceeds to tell a story about a statue a talented carver made, which leads into why Trautman believes that Rambo is unhappy and frustrated with his life: he needs to come "full circle". This means that Rambo must accept that he is, by nature, a combat soldier. This doesn't mean that he has to kill to be happy, but it means that this is what Rambo does and who he is. And by trying to turn away from this, he is in doing so tearing away at himself and therefore causing his own unhappiness. Rambo responds that he isn't quite ready to come full circle quite yet and thanks Trautman, but apologizes because it "has to end for me sometime". Trautman understands and leaves. Rambo can later be seen gilding the steeples on the monastery roofs and sitting on a cot, reflecting about whether or not he has made the right decision. Later in the film after Trautman is ambushed by the Soviets and captured, Griggs returns to the monastery to inform Rambo of the situation as he is repairing a wheel on a wagon. Rambo is angered that the embassy can't do anything to rescue Trautman so he asks Griggs to arrange a secret rescue mission and put him in touch with local guerilla fighters who know where he is being held. Griggs tells Rambo that he will contact him and leaves.
A deleted scene shows Rambo forging his knife in a shack on the monastery grounds.