The dungeon is situated deep in the depths of the Wu Shi Academy, and is the last defense as well as direct entrance to the Wu Shi Dragon Grotto with a cave passageway situated in the far back. The various traps in the dungeon have been activated and include swinging blades, spear lined floors, fire breathing lion statues, poison gas, and deadly rolling logs lined with spear points, several of which have already crashed into the dungeon, with another breaking through the upper floor during battle. Multiple dead monks litter the ground as well, some caught in the very traps they no doubt helped create.
During the Story Mode, it is here where Liu Kang and Kung Lao from the past try to reach the Grotto to protect the Jinsei spring it contains, and battle the Wraith Scorpion pulled from the past era as well, along with the Revenant Jade of the present.
The Shaolin Trap Dungeon features three stage interactions. From left to right they are:
- A burning urn hanging in the far left corner that can be used to bludgeon the opponent with twice.
- A dying monk impaled with a naginata, who can be thrown at an opponent.
- A lion statue that breathes fire, with which you can slam the opponent into twice before the flames go out.
- When using the lion statue on an opponent with less than 10% of their health left, press the X/Square button on the controller rapidly, which will cause the opponent to burn to death, their skin melting off and leaving a charred corpse still aflame.
A Stage Fatality can be performed where the defeated opponent is uppercutted into the air. A spiked pillar then comes in and slams them into the ceiling. They begin to fall to the ground and get impaled by the spike trap.
- In Johnny Cage's Announcer voice he says "It's a Trap" a reference from Star Wars: Return of the Jedi.