The hat is used in almost all of Kung Lao's Fatalities. It has many abilities, such as teleporting back to the Shaolin warrior Kung Lao, the ability to hold a rabbit in it, and boomerang and ricochet abilities. It is known to be used to slice foes in half or into bits, and decapitate them, yet it stangely almost never draws blood onto itself. When it does, it is simply flicked off with just a spin of Kung Lao.
Kung Lao does not have his hat on during his mini-mission in Mortal Kombat: Deception, but he does in every other game if not using his alternate costume in MK:DA and MK:A where he wears his hat on his back.
In the older games, the hat also had a chin-strap used to secure it to the head of actor Anthony Marquez, which was retained for Kung Lao's appearance in Mortal Kombat Gold due to reusing the Mortal Kombat 3 design. After the shift from digital actors to full 3D models, the chin strap was rendered unnecessary and removed from all subsequent redesigns of Kung Lao.