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Kano is thought to have been killed in the first tournament. Instead he's found alive in the Outworld where he once again escapes capture by Sonya. Before the actual Outworld invasion, Kano convinces Shao Kahn to spare his soul. Kahn needs someone to teach his warriors how to use Earth's weapons. Kano is the man to do it.
When Shao Kahn lets Kano live he fails to realize the resourcefulness of the scheming human. Kano lures Kahn's army away on a false mission: then nukes them using a stolen weapon. He fights the remaining warriors and finally defeats Kahn himself. Kano's true intention is to take over the souls which Kahn once possessed. But Kano is unable to control the spirits as they escape and attack him. Rumoured to have suffered a violent death Kano was ignorant of the fact that he saved the world he tried to conquer.