Sarah is the daughter of Charles Graiman, played by Bruce Davison, is the creator of a new generation of KITT (Knight Industries Three Thousand), which is voiced by Val Kilmer and based on a Ford Mustang Shelby GT500KR.

Mike reveals that a significant chunk of his memory is missing due to an unexplained trauma, which coincides with a period when he stopped talking to Sarah.

Also installed in KITT are a grappling hook, a laser that originates from his scanner bar, double mini-guns, defensive flares, offensive missiles, parachute, a dart gun, a sonic inhibitor and an EMP weapon.

Other interior changes include a more conventional steering wheel, replacing the previously seen 3/4 steering wheel, blue lighting in the dashboard over the driver's-side instrumentation and the passenger-side console that becomes red whenever KITT is in Attack Mode, and a standard Mustang rear seat instead of the super-computer laden rear seat of the movie KITT.

KITT disguises as a 4x4 for an off-road mission as Mike is assigned to investigate a right-wing militia group led by PMC leader Walt Cooperton, who started the group after the Department of Defence ended his contract for unknown reasons, which puts a hold on Mikes plans to take Sarah out for her birthday.

Posing as a disgruntled Marine, Mike manages to get himself invited into the group after being tortured by Right-hand man Oren Moss and Coopertons girlfriend, Cassandra.

Mikes search of Coopertons personal belongings, which include Armani suits and $6000 french wine, lead him to conclude is he isn't actually the radicalist they believe.

Unfortunately after he finds large quantities of explosives are somewhere in the camp, he is caught by Cassandra who reveals herself to be an undercover British secret agent posing as one of them.

While Sarah grieves over the loss of her father, Agent Torres (Yancey Arias) and the NSA dismantle the SSC and KITT's AI chip is removed to be installed in his evil predecessor KARR, (once again voiced by Peter Cullen), who is being kept at Area 51.

KARR, who can transform into a humanoid robot with wheels for legs, forcefully seizes Torres as his new operator and has a final confrontation with Mike and KITT.

Meanwhile, Sarah uncovers a windfall of funds secretly left by her father, whose ultimate plan was for her to restart The Foundation for Law and Government at the SSC.