Factual error: After Miyagi and the kid have the conversation with the military man they drive off and round a corner. A scene is shown of the sea and very visible is a shot of "Chinaman's Hat" Island. A feature that if you have ever been to Oahu, Hawaii near Kualoa Point you would know is on the island of Oahu and not in Okinawa where the movie is supposed to take place. See Chinaman's hat at this site: http://www.hawaiiweb.com/oahu/sites_to_see/chinamans_hat.htm.
Factual error: In the scene where Mr. Miyagi and Daniel arrive in a taxi at a construction site, the taxi is stopped by a U.S. Air Force airman first class. The airman asks, "Where you going, buddy?" Mr. Miyagi says, "Tomi village." The airman says, "Never heard of it! This is Kadena Air Base." He then calls out to an off-screen person, "Sarge! Tomi village?" The off-screen voice replies, "You're standing on it, corporal!" The U.S Air Force has never had the rank of corporal in its organization.
Factual error: There is no Bon-festival in Okinawa. Okinawa has a traditional festival called Eisa festival.
Suggested correction: There is an Obon festival. It's very different from what's shown in the movie, and is Japanese versus Okinawan, but that's not an 'error'.
