The Deadly Alliance was a faction formed through the partnership between the sorcerers Quan Chi and Shang Tsung which was created during the Mortal Kombat: Deadly Alliance.
About the Deadly Alliance
The Deadly Alliance was a temporary alliance between two powerful sorcerers: Shang Tsung, advisor to Emperor Shao Kahn and host of the last Mortal Kombat tournament in Earthrealm, and Quan Chi, a free-roaming sorcerer and former ally of the fallen Elder God Shinnok. Their eventual goal was to conquer Earthrealm by using the Dragon King's undefeatable army. In Lex Luthor's Mortal Kombat vs. DC Universe ending, he allied with Quan Chi and resurrected the Deadly Alliance. It is unknown if Mortal Kombat vs. DC Universe is canon or not.
Quan Chi's discovery
At the end of the events of Mortal Kombat 4, Quan Chi was transported to the Netherealm, along with his ally turned nemesis, Scorpion. In the Netherealm, Scorpion relentlessly tormented the necromancer whenever he could. Quan Chi eventually met the two Oni, Moloch and Drahmin, and bargained a deal with them: in return for their protection, he would free them from the Netherealm. Shortly thereafter, Quan Chi found the ruins of an ancient portal, and while examining the artifacts, Scorpion attacked. The two Oni sprang into action and Quan Chi used this time to finish his examination and use Shinnok's amulet to open the portal. He was transported to Outworld and found himself in the lost tomb of the mummified, undefeatable army of the long forgotten Dragon King. He surmised that with such an army at his disposal, he could conquer the realms and defeat the Elder Gods, becoming ruler of all creation.
Partnership with Shang Tsung
Because the army was mummified, Quan Chi needed someone who could reanimate their bodies. That person happened to be the shapeshifter Shang Tsung, who also lived in Outworld. Quan Chi told him about his discovery and his plot, and they came to an agreement. First, they needed to remove the two most important obstacles that stood in their way. It is unclear at what time after the events of Mortal Kombat 4 all of this took place, but the final stages of their plans likely happened around the same time as the main body of the game Mortal Kombat: Deadly Alliance. Their first possible threat was Shao Kahn. Shang Tsung presented Quan Chi before him and after a token display of loyalty, the two attacked, slaying the emperor. It was later revealed, however, that they had killed only a clone of Shao Kahn, as the real Kahn had fled the palace when he sensed treachery in his weakened state. When the emperor's clone lay dead on the floor, Kahn's general Kano stepped out of the shadows and offered his loyalty to the sorcerers. At the same time, Noob Saibot attacked and mortally wounded Prince Goro at a command of Quan Chi, during an important battle between the armies of Edenia and Outworld. Due to Goro's demise, the forces of Edenia were forced to retreat. The two sorcerers then travelled to Earthrealm, through use of a hidden mystical portal, where they ambushed Liu Kang, Earthrealm's champion. Shang Tsung disguised himself as Kung Lao, and ambushed him. Thanks to Quan Chi's intervention in that battle, the sorcerers were able to win, and Shang Tsung snapped Liu Kang's neck and took his soul.
The Deadly Alliance's victory
With their enemies out of the way, Quan Chi used his amulet to open the Soulnado, a portal to the Heavens through which Shang Tsung summoned the souls of countless warriors to animate the army of the Dragon King. They planned to invade Earthrealm with the army, and their ally Mavado, the leader of the Red Dragon, offered his loyalty in exchange for the Red Dragon's safety. Mavado had found out that they employed Kano, one of the last Black Dragon members, and expressed his desire to kill him. The Alliance would give him a fight to the death with Kano if Mavado found and eliminated Kenshi. He succeeded, however, it is unknown if he faced Kano, and Mavado was attacked by Kabal. Raiden's Earthrealm champions then travelled to Outworld to stop the Deadly Alliance from bringing all of their plans to fruition. However, their attack against both sorcerers failed. Jax Briggs, Johnny Cage, Kung Lao, Sonya Blade and the Edenian princess Kitana were all killed. Kenshi was badly wounded and Sub-Zero was betrayed by his own disciple, Frost, although this wasn't the doing of the Deadly Alliance. With all heroes from Earth caught up, wounded or dead, Raiden took on the Deadly Alliance himself. Ultimately, he was defeated as well.
The Desperate Alliance
Both sorcerers had little time to relish in their victory and quickly turned on each other. After a brief and vicious fight, Quan Chi stood victorious. He then turned his attention to a tall, massive intruder: Onaga, the Dragon King, who had returned from beyond death. It became obvious soon that Quan Chi could not stop the Dragon King. Even when Shang Tsung and Raiden regained consciousness and joined the fight against their common foe, Onaga was unstoppable. In a last ditch effort, Raiden released his godly essence in a terrible explosion which destroyed the palace, the Soulnado, the Deadly Alliance and Onaga's army, but not Onaga himself, who had now gained control of the Amulet of Shinnok. This marked the end of the Deadly Alliance.