Fed up with continuous losses in tournament battle, Shao Kahn who had lost the Outworld tournament in 1994, enacts a 10,000 year-old plan. He would have his Shadow Priests, led by Shang Tsung, revive his former Queen Sindel, who unexpectedly died at a young age. However, she wouldn't be revived in the Outworld. She would be resurrected in the Earth Realm. This would allow Shao Kahn to cross the boundary lines and reclaim his queen. By 1995, the plan was ready and operating.

When Sindel is reincarnated in Earth Realm, Shao Kahn reaches across the dimensions to reclaim her. As a consequence of his action, the Earth Realm becomes a part of the Outworld, killing billions instantly. Only a few are spared, as Raiden protects their souls. He tells them that Shao Kahn must be stopped, but he cannot interfere; due to his status, he has no power in Outworld, and Earth Realm is partially merged with Outworld.

Shao Kahn has unleashed extermination squads to roam throughout the Earth Realm and kill any survivors. Also, Raiden's protection only extends to the soul, not to the body, so his chosen warriors have to fight the extermination squads and repel Shao Kahn.

Mortal Kombat 3 follows Mortal Kombat II and precedes Ultimate Mortal Kombat 3 and Mortal Kombat Trilogy which were both updates of this game. The next game in the series was Mortal Kombat 4.