The Red Dragon had existed for centuries as a secretive criminal organization. Members such as Mavado were highly skilled and disciplined warriors. But in the last century, many of the more reckless members became dissatisfied with the restraints the code of the Red Dragon placed on them and broke away to form their own gang. Since then, it has been the Red Dragon's number one priority to completely eradicate the infidels known collectively as the Black Dragon.

For many years Mavado's Red Dragon clan had been secretly engineering the destruction of their rivals, the Black Dragon. Through careful manipulation, Mavado had used the Special Forces to unwittingly aid them in this task. In return for eliminating Kenshi for the Deadly Alliance, Mavado was finally granted his battle with the last known member of the Black Dragon: Kano. After a long, brutal fight, Mavado emerged victorious and all traces of the Black Dragon had been erased. Impressed with the fighting skill and discipline of Mavado as well as other members of his clan, Quan Chi realized the potential the Red Dragon held for staging the eventual invasion of Earthrealm. In return for their continued assistance, he offered crucial information about a new threat to Mavado's Red Dragon clan... the Lin Kuei.